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History of U.S. Treasury Floating Rate Notes

Introduced in 2013, Floating Rate Notes (FRNs) are the first new marketable securities since the Treasury Inflation-Protected Security (TIPS) in 1997.

An FRN is a security that has an interest payment that can change over time. As interest rates rise, the security’s interest payments will increase. Similarly, as interest rates fall, the security’s interest payments will decrease.

Treasury FRNs are indexed to the most recent 13-week Treasury bill auction High Rate prior to the lockout period, which is the highest accepted discount rate in a Treasury bill auction.

Specific terms and conditions of each FRN issue, including the auction date, issue date, and public offering amount, are announced prior to each auction. Currently, the auction frequency is:

  • The 2-year FRNs are auctioned in January, April, July, and October.
  • 2-year FRNs are also auctioned as reopenings in February, March, May, June, August, September, November, and December. The reopened security has the same maturity date, spread, and interest payment dates as the original security, but has a different issue date and usually a different price.

After the auction announcement on January 23, 2014, the first auction of a FRN was held on Wednesday, January 29 and then issued on January 31. The auction raised $15 billion, with bids totaling over $85 billion (or, a bid to offering ratio of 5.67).

Treasury’s introduction of FRNs provided a number of benefits, including:

  • assisting Treasury in managing the maturity profile of the nation’s marketable debt outstanding,
  • expanding Treasury’s investor base, and
  • helping to finance the government at the lowest cost over time.

Timeline of U.S. Treasury Floating Rate Notes

View historical information regarding U.S. Treasury Floating Rate Notes.

Other Resources

For more information on Floating Rate Notes, select one of the resources below: