One week back, the U.S. Treasury Department announced it would start auctioning off two-year floating rate notes – either later this year or early next year. The news marked the first new financing product from the U.S. government in more than 15 years since TIPS or Treasury Inflation-Protected Securities were introduced in 1997.
By Tom Lydon:
By John Spence & Tom Lydon
Many investors worried about the prospect of rising interest rates are taking a second look at ETFs that invest in floating rate debt.The Federal Reserve's bond buying and investors' desire for safety has pushed 10-year Treasury yields below 2%. However, bond investors could get hurt if interest rates finally start to rise after years of rock-bottom Treasury yields.
Manmohan Singh, Peter Stella, 14 May 2012Much of the debate over public finances in the US relates to the amount of debt, this column explores the type of debt. It criticises the recent suggestion that the US Treasury should start issuing floating rate notes.Full Article: US debt issuance since 1951 and the fallacy of issuing floating rate notes
Now there are two members of the club with talk that more may be on the way.
One day after Dundee REIT became the first to issue floating rate unsecured debt, another REIT has joined the party.
H&R REIT has priced a $235-million private placement of floating rate senior unsecured debentures. The borrowing is for a two year term — meaning a maturity date of October 9, 2015 — and will carry an interest rate of 3-month CDOR plus 150 basis points.
By Michael Johnston:The latest addition to the fast-growing ETF lineup is a fund from State Street that will offer exposure to investment grade debt that adjusts interest payouts based on prevailing market conditions.
Michael Johnston submits:Continuing a recent trend on the fixed income side of the ETF arena, iShares announced the launch of an ETF that offers exposure to floating rate debt. The new Floating Rate Note Fund (FLOT) will seek to replicate the Barclays Capital U.S.