floating debt

Floating debt

Short-term debt that is renewed and refinanced constantly to fund capital needs of a firm or institution.

Floating Debt

Short-term debt that a company refinances continuously. A company may utilize floating debt instead of long-term debt because short-term loans have lower interest rates. Also, if interest rates fall, the company will be able to refinance at a lower rate to reduce its expenses. The risk of floating debt is the possibility that interest rates will rise, increasing the company's expenses.

floating debt

Short-term debt that is subject to continual refunding by the issuer.