Base-Rate Floor

Base-rate floor is a contractual minimum reference rate used when calculating interest on a floating-rate loan.

Why this matters to income investors

A floor can limit the decline in loan income when the benchmark falls.

How to use base-rate floor in your research

Check when the asset income and borrowing costs reset. A rate change can reach each side at a different time, so compare the net effect on the earnings used to fund distributions.

This material is general education and information, not individualized investment, tax, or legal advice.