A floating-rate note (FRN) in which coupon payments are subject to a floor set at the preceding coupon payment and a cap equal to the preceding coupon plus some incremental margin. Coupons on one-way floating-rate notes are typically pegged to LIBOR (3- or 6-month). For example, a one-way floating-rate note may be structured so that it is linked to 6-month LIBOR, while its floor is readjusted on resetting dates with a 20 basis points as incremental margin.

Effectively, one-way floating-rate notes deliver a return over time that increases a little bit from period to period, with the coupon payment never dropping below the level of the preceding coupon payment. This type of floating-rate notes can particularly be instrumental to issuers who expect the implied forward rates would be higher over time, while expecting actual rates to remain above the floor level.

A one-way floating-rate note is also known as a ratchet floating-rate note.