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Derivatives

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  • October 14, 2021
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Corridor Floating Rate Note

A floating rate note that pays periodical payment (coupons) calculated on the basis of the number of days during the preceding interest period in which a reference rate (3-month LIBOR, 6-month LIBOR) remains within a pre-defined corridor. If the reference rate lies within the corridor, the holder earn a much higher coupon than the holder of an identical plain-vanilla floating rate note (same issuer, maturity, reference rate, etc.). However, if the reference rate lies outside the corridor, no interest accrues to the holder.


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