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The company also sold $150 million of 15-month notes with a floating interest rate.
Commercial debt carries a floating interest rate tied to the rates big banks charge each other for money, while noncommercial loans are usually at fixed rates.
States use swaps when they want to issue a bond at a floating interest rate but protect themselves from future swings in rates.
The oddity was that, although Nomura kept the fixed coupon on the bonds, it paid back to M.P.S. an unusually low floating interest rate.
A bank loan taken out at a floating interest rate, or denominated in foreign currency, exposes the borrower to additional risks beyond his control.
He argues that it no longer really exists, assuming it ever did, and wants to find a new benchmark for floating interest rate contracts.
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In addition, Freddie Mac held a large portfolio of mortgage-backed securities with floating interest rates.
For decades, it has been the dominant determinant of floating interest rates, with trillions of dollars in loans and derivatives priced off those rates.
The governor said there was a "greater sensitivity" to floating interest rates, where lenders increase the cost of home loans as soon as the Bank announces a move in official rates.
But he cautioned that China must first clean up its banking system, which is riddled with bad debts, before allowing the kind of competition that floating interest rates would bring.
But should inflation return, floating interest rates tend to track prices higher — increasing investors' returns but also sparing them the big principal losses that can befall holders of fixed-rate debt.
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Justyna Jupowicz-Kozak
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