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  • April 20, 2023
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Variable Interest Bond

A bond that has a variable/ floating rate interest- that is, an interest rate that adjusts periodically (monthly, quarterly, semi-annually, etc.) according to a pre-specified formula; the underlying variable interest rate is a market index such as LIBOR or a spread-adjusted risk-free rate (RFR).

Variable interest bonds carry variable interest, determined by a coupon rate which changes (re-fixes) according to the prevailing market interest rate. The coupon rate is paid by a bond’s issuer to bondholders at periodical points in time over the span of the bond’s term.

This bond is also known as an adjustable rate bond or a variable rate bond.


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