Floating-Rate Note (FRN)
A floating-rate note (FRN) pays a coupon that resets against a benchmark, reducing fixed-rate duration without eliminating credit, spread, or liquidity risk.
Core floating-rate note terms for FRNs, VRNs, benchmark indexes, quoted spreads, and coupon reset mechanics.
Core floating-rate notes are debt securities whose coupons reset with a market reference rate plus or minus a stated spread. Their prices are usually less sensitive to interest-rate changes than comparable fixed-rate bonds, but credit spreads, benchmark mechanics, reset lag, caps, floors, and liquidity still matter.
Use this branch when the main question is basic FRN mechanics. The floating rate page covers the interest-rate mechanism, while floating-rate note covers the security commonly abbreviated FRN or VRN. Important terms include the reset index, quoted spread, reset frequency, payment date, cap, floor, and reference-rate fallback.
For a security with a holder put or tender feature, use Variable-Rate Demand Obligation. For a coupon with an upper limit, use Capped Floating-Rate Note.
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A floating-rate note (FRN) pays a coupon that resets against a benchmark, reducing fixed-rate duration without eliminating credit, spread, or liquidity risk.