UBL and Jazz just broke new ground in Pakistan’s financial markets

On the 16th of January 2026 it was announced that United Bank Limited had executed Pakistan’s largest interest rate swap by entering into a contract worth Rs 75 billion in notional value with Pakistan Mobile Communications Limited (Jazz). The purpose of this swap was to allow Jazz to convert its floating rate exposure into a fixed rate obligation. For many in the financial services industry, this was a momentous occasion as a swap transaction and one worth nearly $270 million is a rarity to say the least.

The benefit to Jazz will be that it will enhance and normalize its cost visibility and allow for long term planning to be carried out as it can forecast its financial costs more accurately. The loan that has been pegged and fixed was last reset back in November of 2025 when it was set between 11.5% and 12%. After the swap, Jazz has locked in the rate at which it will be charged against. 

In a country where derivatives and financial products are hard to come by, this transaction is one that has functionality and adaptability to the Pakistani context. However, the fact that it is being celebrated and lauded just goes to show how often such transactions do take place.

So what exactly is an interest rate swap and how does it work?