Inverse floater (or reverse floater)

A floater whose coupon fluctuates inversely with its reference rate-increasing when the reference rate decreases and decreasing when the reference rate increases. With each coupon payment, the floating rate is reset for the next period according to the formula: floating rate = fixed rate - coupon leverage reference rate. The multiplier is called the coupon leverage. Often, it is equal to 1, but not always. If it exceeds 1, the instrument is called a leveraged inverse floater. Inverse floaters have been issued by companies or government-sponsored enterprises as intermediate-term notes. A typical structure used in the US might have a maturity of five years, pay interest quarterly, and offer a floating rate of 12% minus two times a reference rate of 3-month USD Libor. There might also be a cap and/or floor for the floating rate.