Hi, I would like to know how a floating rate bond will be valued when LIBOR is used to compute the coupon cashflows and the bond is discounted using an OIS rate. Normally I have seen valuation of a FRB when both the coupon and discount curves are the same. What happens when these are different?
What you have seen is right. The other is hypothetical and does not quite any meaning to the concept of FRN
The basic concept of a FRB is to link the coupons to an interest rate, but still the coupon amount and discount rate can be different due to the quoted and required margin(Level 1 stuff). Therefore you can value a bond by the usual discounting method.