Reverse Floater

A reverse floater is a type of bond which has a floating interest rate. The interest rate of a reverse floater is linked to a reference rate (such as the LIBOR) but performs exactly the opposite of the reference rate it is linked to.

When the reference interest rate goes down, the reverse interest rate goes up. This type of bond is also known as a bull floater.

Reverse floaters differ from conventional bonds, which are fixed-interest investment vehicles, because their interest rates are variable and change throughout the bond term as dictated by the linked index.

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