Definition: Structured floating-rate note

Category: External debt - IMF

The structured floating-rate note is a variation of a standard variable-rate bond (that is, a long-dated debt security whose coupon payment is reset periodically by reference to an independent interest rate index such as six-month LIBOR). 

The structured issue includes a derivative that allows the coupon calculation to be tailored to meet investors’ interest rate expectations. 

For instance, there may be an interest rate collar or band—the interest rate cannot increase above an upper specified rate or fall below a lower specified rate. 

The issue of structured floating-rate notes has grown as borrowers have used financial derivatives to tailor financing products to investor demands while meeting their own funding needs. http://ec.europa.eu/eurostat/ramon/statmanuals/files/external_debt_guide_2003_EN.pdf#page=227