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Finance

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  • January 10, 2023
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Convertible-Rate Floater

A floater (floating-rate note) that grants issuers and investors the right to convert from a floating rate of interest to a fixed rate or vice versa. For example, an investor may have an option to convert from a floating rate to a fixed rate when market rates falls below a specific level. Similarly, an issuer may be entitled to convert from a floating rate to a fixed rate when market rates exceed a given limit. This convertibility feature allows issuers and investors to hedge against unfavorable future interest rate movements and to take views on interest rates.


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