floating debt
Definition
Continuously refinanced short-term debt for a company's ongoing operations. The advantage of floating debt is that there is a chance to benefit from reductions in interest rates. In addition, interest rates on long-term debt are often higher than interest rates on short-term debt, so the company might be saving itself money by refinancing short-term debt as opposed to borrowing long-term. However, the downside is that the company might suffer if interest rates rise and they have to refinance at a higher cost.
