Perspectives Blog

When do floating rate loans begin to float?

Columbia Management, Investment Team | July 11, 2013

…ence stays below the floor, loans will behave more like conventional bonds in that coupon payments will remain unchanged. One important caveat is that even while coupons remain static, investors likely will not experience the inverse relationship between prices and yields more traditionally associated with bonds, so rising rates should not cause price deterioration within those loans. As rates continue to rise and the reference rate moves through…