An floating rate note in which the coupon (interest payment) is floored, i.e., cannot be less than a minimum level (the floor). Floored floating rate notes are capital guaranteed products (also fixed-income instruments). Typically, they pay variable-rate coupons on a yearly, semi-annual, or quarterly basis. The coupon could be linked to LIBOR or any other resetting rate.
For example, if the LIBOR rate for a given term (say 3-month LIBOR) fixes lower than the prespecified floor, then the coupon will be determined based on the floor rather than the LIBOR rate. Otherwise, in cases where LIBOR fixes above the floor, the coupon is determined based on the LIBOR rate.
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