It stands for knock-out floater; a barrier floater in which the coupon is deactivated (knocked-out) if the reference interest rate exceeds or falls below a prespecified barrier level. This instrument allows investors to take a view on the movement of interest rates above or below a desired threshold level, after which coupon payment (whether payable or receivable) becomes ineffective.
A knock-out floater is also known as a knock-out floating-rate note.
