Floating Rate Bonds – What They Are And How They Work

David Waring

A floating rate bond (also known as a “floater”) is a bond that has a variable coupon, tied to a benchmark or reference rate, like the London Interbank Offered Rate (LIBOR), the U.S. Treasury bill rate, or the fed funds, plus an additional spread. The reference rate will fluctuate throughout the life of the security, but the quoted…