An amortizing swap is a type of interest rate swap where the notional principal amount is reduced over time, typically in line with the decrease in the outstanding amount of a loan. In this case, Green Grass Co. does not want to exchange the notional principal at the inception of the swap, but instead, it wants to decrease the principal in a predetermined manner. This is a characteristic feature of an amortizing swap. The principal amount in an amortizing swap decreases over time, which can be beneficial for a company like Green Grass Co. that wants to gradually reduce its exposure to interest rate risk. The reduction in the principal amount can be structured to match the amortization schedule of the underlying loan, making it a suitable choice for this transaction.

Choice A is incorrect. A basis swap involves exchanging one type of floating rate payments for another type of floating rate payments. It does not involve a reduction in the principal amount over time, which is what Green Grass Co. wants.

Choice C is incorrect. A deferred swap refers to a situation where the start date of the swap agreement is postponed to a future date, but it does not involve reducing the principal amount over time.

Choice D is incorrect. In a step-up swap, the interest rate increases over time according to a predetermined schedule, but it does not involve reducing the principal amount over time as desired by Green Grass Co.