If we issue a floating-rate bond price at 100 with floating rate coupon, is the bond always value 100? Thanks.
No.
Between coupon reset dates, the value can change, but will reset to par at the next reset date.
However, if the market’s view of the riskiness of the bond changes, so that its required spread over its index changes, then at reset dates its value will not reset to par.
Got it. Very Clear! Many thanks for your help, magician.
You’re quite welcome.
the reference rate of the day is used to pay your coupon and rate might chagne in between that which not reflect the coupon, hence the price changes in between but gets reset at the coupon date.