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A bond whose interest rate varies with the interest rate of another debt instrument, e.g., a bond that has the interest rate of the Treasury bill +.25%.

Fairway Bond

A bond with a coupon that is linked to some short-term benchmark interest rate. That is, a fairway bond carries a variable interest rate that changes according to a specified short-term interest rate. For example, a fairway bond may have a coupon of LIBOR + 0.5%. When investors believe interest rates will soon rise, they have an incentive to stay out of the bond market because their return would be locked at the lower interest rate. Fairway bonds reduce this incentive by allowing investors to take advantage of higher interest rates as they occur. A fairway bond is also called a floater. See also: Inverse floater.

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.


References in periodicals archive ?
The results of the tests were very encouraging, and the officials from the Kiev Institute stated the following: "All floaters of Eco Wave Power Company have proved their workability… According to the results of the tests, we have reached a decision to recommend enlarging the model to greater sizes.
My own floater and flashes occurred after six weeks of persistent diarrhea from parasites.
Despite their attraction, floaters aren't risk free.
Recently, investment banking firms have structured floater/inverse floater transactions that pay interest every six months.
In the tradition of Floater, members of Grynch pitched in to help paint the basement.
The successful use of tender option bond transactions depends on the availability of high-quality municipal bonds to be transferred to the trust and the market demand for the short-term floaters issued by the trust.
Typically, a Floater show is dark and incorporates lighting and projections.
Tonight," Cassandra Pierce-Raglione had written, "is my 104th Floater concert.
When Robert Wynia began working on a new album in March with his Floater bandmates, the theme of "change" kept reappearing.
1 /PRNewswire/ -- Floater Corporation today announced the availability of Floater, ver.
Just in time for the holidays, the Water Taxi is making available its new Super Floater passes, offering discount travel throughout the city's beautiful waterways
Class A-4 is a floater above LIBOR while Class A-5 is an inverse floater against LIBOR.