Floating rate bonds are instruments where the interest rate is not FIXED, but re-set periodically with reference to a pre-decided benchmark rate. For instance, a company can issue a 5-year floating rate bond, with the rates being reset semi-annually at 50 basis points above the 1- year yield on CENTRAL government securities. EVERY six MONTHS, the 1-year benchmark rate on government securities is ascertained from the prevailing market prices. The coupon rate the company would pay for the next six months is calculated as this benchmark rate plus 50 basis points.
Floating rate bonds are also known as variable rate bonds and adjustable rate bonds.

Floating rate bonds are instruments where the interest rate is not fixed, but re-set periodically with reference to a pre-decided benchmark rate. For instance, a company can issue a 5-year floating rate bond, with the rates being reset semi-annually at 50 basis points above the 1- year yield on central government securities. Every six months, the 1-year benchmark rate on government securities is ascertained from the prevailing market prices. The coupon rate the company would pay for the next six months is calculated as this benchmark rate plus 50 basis points.
Floating rate bonds are also known as variable rate bonds and adjustable rate bonds.