Investors Turn to Older Fixed-to-Floating Notes

Investors are turning to secondary markets to buy notes that pay fixed interest rates before switching over to a floating benchmark, as securities issued more than a year ago offer better terms than new issuance.

First-time sales in the U.S. of fixedto-floating rate securities were $29.1 million in November, according to data compiled by Bloomberg. That’s less than one-eighth of the $247.1 million in notional trading volume in the month for notes that have been issued since January 2010, according to Trace, the bond-price
reporting system of the Financial Industry Regulatory Authority.

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