a debt instrument whose coupon rate is fixed based on a reference rate such as LIBOR (London Interbank Offer Rate) or the Treasury bill rate
A bond for which the interest rate is adjusted periodically according to a predetermined formula, usually linked to an index. [Back
A bond with an interest rate that fluctuates (floats), usually in tandem with a benchmark interest rate during the life of the bond.
Unlike bonds that carry a fixed coupon rate, floating-rate bonds link payouts at maturity to prevailing market interest rates. The coupon of the typical 15-year floating-rate government bond is recalculated every six months in accordance with the auction results for the benchmark 10-year Japanese government bond. Floating-rate bonds are designed to prevent investors from receiving below-market interest rates as will happen to fixed-rate bonds when market rates increase after they are purchased. Given the lack of attractive investment alternatives, investors are snapping up 10-year government bonds. A record number of bids were made on Jan. 9, pushing down the rates on some 15-year floating-rate bonds to zero. The Ministry of Finance has set a floor for bonds targeted at individual investors to avoid falling into a situation in which they offer no return, thereby guaranteeing at least some interest income for investors.
A bond for which the interest rate is adjusted periodically, linking to the level of a market reference yield.
A bond where the interest rate is adjusted periodically. A floating-rate bond is usually linked to an index.
A long-term bond for which the interest rate is adjusted periodically according to a pre-determined formula, based upon specific market indicators.
