Inverse floater Definition
An asset, such as a mortgaged backed bond, paying an adjustable interest rate that rises or falls in the opposite direction of the movement of general market interest rates. The floating coupon rate is calculated as the difference between a constant interest rate and a designated index. For example, the floating rate might be 14 percent minus the current rate of LIBOR. As LIBOR increases, the bond's coupon payment rate decreases and vice versa. An inverse floater is a type of structured note.