A mechanism where the INTEREST RATE on a FLOATING RATE NOTE or BOND is fixed once rates fall below a predefined level. The drop lock allows the issuer to lock in a lower rate of funding. See also NOTE, SPREAD LOCK.
DROP LOCK
A mechanism where the INTEREST RATE on a FLOATING RATE NOTE or BOND is fixed once rates fall below a predefined level. The drop lock allows the issuer to lock in a lower rate of funding. See also NOTE, SPREAD LOCK.