Senior loans are obligations of sub-investment grade rated companies (rated below Baa3 by Moody’s, BBB- by Standard & Poor’s). The interest rate paid on senior loans typically floats with major short term interest rates. Senior loans are typically backed by collateral such as company assets.
Floating Rate Securities
Floating rate securities are obligations of companies typically rated investment grade (rated above Baa3 by Moody’s, BBB- by Standard & Poor’s). The interest rate paid on floating rate securities typically floats with major short-term interest rates.
David Mazza is a Vice President of State Street Global Advisors and the Head of Research for SSGA’s ETF and mutual fund businesses.