floating-rate note

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Floating-rate note (FRN)

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.

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.
References in periodicals archive ?
Variable rate bonds offer the opportunity to lower the cost of capital for long-term capital improvement financing and have some inherent advantages:
In the event that variable rate bonds are put back to the bank and are in the bank bond mode, the additional costs become general obligations of IHFA.
22, 1995 to those holders of the Variable Rate Bonds who do not accept the offer.
48 per share and pay interest on the variable rate bonds resulting in a coupon rate of 16 percent to 23 percent.
Additional revenue generated by the 20 percent coverage factor will be used to call variable rate bonds.
15 /PRNewswire/ -- The New York City Municipal Water Finance Authority has priced its first variable rate bond issue -- $100,000,000 Adjustable Rate Fiscal 1993, Series C Bonds.
To assure the adequacy of funds available for variable rate debt service, also pledged to the variable rate bonds are payments to be received under interest rate swap agreements and interest rate cap agreements between the authority and a qualified swap provider, defined as an entity rated in one of the two highest rating categories by Moody's.
Novant currently has one swap transaction in effect with a notional amount of $135 million to hedge its series 2004A and 2004B variable rate bonds.
The series 2001B variable rate bonds also have a short term rating of 'F1+' due to a standby bond purchase agreement with JP Morgan Chase Bank N.
The series 2006 C, 2006D, and 2006E variable rate bonds are expected to price on June 7.
2 million Oregon DOT highway user tax revenue subordinated lien bonds series 2006B-1 and 2006B-2 variable rate bonds.

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