This is a debt security where the interest paid to the holder floats up or down in accordance with a benchmark rate of interest (such as LIBOR) rather than being fixed.

Since the coupon payments are less predictable for the issuer with this type of security they are less common than simple fixed income securities. In theory the interest payments on these securities can be linked to any interest rate but typically one of the interbank rates is chosen. They should not be confused with index-linked securities where the benchmark is usually a rate of inflation.