floating-rate note

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Floating-rate note (FRN)

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Floating-Rate Note

A bond with a variable interest rate. These bonds typically have coupons renewable every three months and pay according to a set calculation. For example, a note may have an interest rate of "EURIBOR + 1%" and pay whatever the EURIBOR rate happens to be at the time plus 1%. Some FRNs have maximum and minimum interest rates, known as capped FRNs and floored FRNs, respectively. An FRN with both a maximum and a minimum interest rate is called a collared FRN. In the United States, government sponsored enterprises issue most FRNs while banks do the same in Europe. See also: Adjustable-rate mortgage.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

floating-rate note

An unsecured debt issue with an interest rate that is reset at specified intervals (usually every six months) according to a predetermined formula. Floating-rate notes usually can be redeemed at face value on certain dates at the holder's option. Floating-rate notes pay short-term interest and generally sell in the secondary market at nearly par value. Floating-rate notes are indicated in bond transaction tables in newspapers by the symbol t. Also called floater, variable-rate note. See also convertible floating-rate note, droplock bond, variable-rate demand obligation, yield curve note.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Class B mortgage-backed floating-rate notes: 'AAA(EXP)sf'; Outlook Stable
The coupons on the floating-rate notes, to be paid every six months, are equal to the weighted average yield of six-month treasury bills at the four most recent auctions plus a spread, the ministry said.
- Sale of $2.5 billion of floating-rate notes due in June 2012 which yield 20 basis points more than the three-month Libor.
Singapore-based Oversea-Chinese Banking Corporation Limited (OCBC) (O39.SG) is set to price AUD300m of three-year floating-rate notes to yield 85 basis points over the three-month Bank Bill Swap reference rate.
Ireland's Anglo Irish Bank Corporation Limited (AIB) (DUB: CKL1) (OTC: AGIBY) has said that the holders of EUR690.22m of its euro-denominated, subordinated floating-rate notes due in 2017 have validly offered their bonds to the bank for exchange.
Floating-rate notes could replace term loans and free up lending capacity with bank syndicates; however, greater variable rate debt exposure adds interest rate risk and reduces weighted average debt maturities causing a potential asset liability mismatch, which is negative for credit profiles.
23 February 2012 - Sydbank (CPH:SYDB) plans to issue unsecured floating-rate notes with a two-year maturity, the Danish lender said on Thursday.
The issuance, which will mature on June 10, 2016, comprises JPY86bn of fixed- and JPY15bn of floating-rate notes. The fixed-rate bonds carry a coupon of 0.89 percent, while the floating-rate note has a spread of 0.44 percent plus three-month euro-yen London inter-bank offered rate.
Aeolos S.A.'s floating-rate notes are linked to the Greek sovereign IDR due to the unconditional and irrevocable undertaking by the Hellenic Republic to provide any shortfall amounts due by the issuer on the notes and expenses.
The new debt will be offered in exchange for BBK's USD275m subordinated step-up floating-rate notes due 2017, of which USD152.43m is currently outstanding, the rater added.
The bank sold the bonds in five-year fixed-rate notes, three-year floating-rate notes and five-year floating-rate notes.
Securities and Exchange Commission, assigned United Overseas Bank Limited's (UOB, AA-/Stable) AUD600 million senior unsecured floating-rate notes due 24 January 2022 a rating of 'AA-'.