Term:
Perpetual floating rate notes
Definition:
A debt security whose coupon is refixed periodically on a refix date by reference to an independent interest rate index such as three-month LIBOR. Generally, these instruments are issued by financial institutions, particularly banks, and are perpetual so as to replicate equity and qualify as tier-two capital under the Basel capital adequacy requirements. Investor demand for perpetual floating-rate notes has been weak in recent years.
Domain:
Finance
Source:
IMF, 2003, External Debt Statistics: Guide for Compilers and Users – Appendix 1. Special financial instruments and transactions: classifications, IMF, Washington DC