Leveraged Floater

See: Leverage. See: Floater.

When you indulge yourself at Tamale Fest and, after just barely making it to the bathroom, something gets stuck when you go to flush. Leveraged floater.

Also, it's a term for a particular type of debt security.

A floating-rate note is a debt security where the coupon rate (the amount it pays out) moves around. It floats. The rate the bond pays its holder is tied to some reference point, uusually some measure of overall interest rates.

These bonds are known as "floaters." A leveraged floater has a coupon rate that moves more than its reference index.

There's a floater with an interest rate of 5% when treasuries are paying 2%. The rate on the floater is tied to the treasury yield. Treasury rates rise to 3% and, in response, the floater's rate rise to 6.5%.

So treasury yields rise 1 percentage point, but the floater's rate climbs 1.5 percentage points. Since the increase is more than the index rate, the security is considered a leveraged floater.