Term:
Flip-flop floating rate note (FRN)
Definition:
FRN that combines an FRN with a very long final maturity, or even a perpetual issue, and an investor option to convert after a specified period into a short-dated FRN that typically pays a lower margin over LIBOR than the original issue. The investor further has the option at a later date to convert back into the initial issue before redemption of the short-dated note.
Domain:
Finance
Source:
Coordinated Portfolio Investment Survey Guide, Second Edition, International Monetary Fund, 2002, Washington DC. Appendix VI: Definition and Description of Instruments