A floating rate note (FRN) or bond is a security that pays a coupon linked to a variable benchmark. In Australia FRNs generally pay a coupon set as a margin above the bank bill swap rate (BBSW) which is the market benchmark three month interbank rate (sometimes the 1 month BBSW). The actual coupon for an interest period will be determined at the start of that period by applying the margin to the three-month BBSW rate on the first day of the coupon period. The three-month BBSW rate will rise and fall over time based on prevailing interest rates. The margin is fixed and will be set at the time of issue« Back to Glossary Index
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