floating-rate note

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Related to Floating-Rate Securities: Variable Rate Bond

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 ?
If your company has limited its liquidity management selections to fixed-rate income issues, you might want to consider floating-rate securities. However, you need to evaluate floaters from an appropriate maturity perspective.
mortgages was launced in March 1987, and a total of L1.1 billion floating-rate securities backed by floating-rate mortgages were issued for the year.
Suppose a company has $Y in AA-quality, floating-rate securities which pay the 13-week T-bill rate plus 70 basis points.
Consistent with Fitch's criteria for 'AAAmmf' rated money market funds (MMFs), the fund also limits the maturity date of any single investment to 397 days with the exception of floating-rate securities issued by highly rated sovereigns, supranational, or government agencies benefiting from strong market liquidity, which could have maturities as long as 762 days.
The company sold $550 million of floating-rate securities in 2005 at 75 basis points over the London interbank offered rate, or generally called Libor.
Corporate credit union interest income was affected more than natural person credit unions, McGeorge said, because corporates own more Libor-indexed assets like floating-rate securities and fixed-rate bonds with attached interest rate swaps.
Mortgage giants Fannie Mae and Freddie Mac have had success in selling floating-rate securities.
The floating-rate securities were priced at par, while the fixed-rate ones were set issue and re-offer prices of 99.944% of face value, resulting in a yield of 3.6375%.
In a statement to the Australian Stock Exchange, the bank said that the sale, which included AUD590m of fixed-rate bonds and AUD110m of floating-rate securities, were priced to yield 275 basis points more than the three-month bank bill swap rate.
The company said on July 4 it won't proceed with the sale of residential mortgage-backed bonds "at this time based on market feedback." Tamweel had planned to raise $235 million from the sale of the floating-rate securities.
ANZ set issue and re-offer prices of 100.533% and 99.783% of principal, respectively, to the fixed-rate tranche and rated the floating-rate securities at par.