Definition: Perpetual floating-rate notes

Category: External debt - IMF

A debt security whose coupon is refixed periodically on a refix date by reference to an independent interest rate index such as three-month LIBOR. Generally, these instruments are issued by financial institutions, particularly banks, and are perpetual so as to replicate equity and qualify as tier-two capital under the Basel capital adequacy requirements. Investor demand for perpetual floating-rate notes has been weak in recent years. http://ec.europa.eu/eurostat/ramon/statmanuals/files/external_debt_guide_2003_EN.pdf#page=227