A zero-coupon swap is an exchange of cash flows in which the stream of floating interest-rate payments is made periodically.
A zero-coupon swap is a derivative contract entered into by two parties. One party makes floating payments which change according to the future publication of the interest rate index upon which the rate is benchmarked.
The other party makes payments to the other based on an agreed fixed interest rate.
The fixed interest rate is tied to a zero-coupon bond or a bond that pays no interest for the life of the bond but is expected to make one single payment at maturity.

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