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LIBOR stands for the London Interbank Offered Rate and is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale (or "interbank") money market. A reference rate is any publicly available quoted number or value that is used by the parties to a financial contract. ...
An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. ...
A bank is an institution that provides financial service, particularly taking deposits and extending credit. ...
For short-term mutual funds investing in money market securities, see Money fund: The money market is the financial market for short-term borrowing and lending, typically up to thirteen months. ...
Scope
LIBOR rates are widely used as a reference rate for :- for a number of currencies, especially the US dollar (see also Eurodollar). They thus provide the basis for some of the world's most liquid and active interest rate markets. This article needs to be cleaned up to conform to a higher standard of quality. ...
In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a set price specified on the last trading date. ...
In the field of derivatives, a popular form of swap is the interest rate swap, in which one party exchanges a stream of interest for another stream. ...
Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a spread. ...
A syndicated loan (or syndicated bank facility) is a large loan in which a group of banks work together to provide funds for a borrower. ...
The United States dollar is the official currency of the United States. ...
In finance, the prefix euro as in eurodollars or euroyen refer to currency deposited outside the country of their origin. ...
For the Euro, however, the usual reference rates are the Euribor rates compiled by the European Banking Federation, from a larger bank panel. A Euro LIBOR does exist, but mainly for continuity purposes in swap contracts dating back to pre-EMU times. The euro (symbol: €; banking code: EUR) is the single currency of the following twelve European Union member states: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain; collectively also known as the eurozone. ...
Euribor (Euro Interbank Offered Rate) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the euro wholesale (or interbank) money market. ...
The European Banking Federation (abbreviated FBE) is an organization of the European banking sector, representing interest of over 4,000 banks from EU Member States, Iceland, Norway and Switzerland. ...
This article covers the EMU of the European Union. ...
Technical features LIBOR is fixed by the British Bankers Association (BBA) at about 11:00 each day, London time, and is a filtered average of inter-bank deposit rates offered by designated contributor banks, for maturities ranging from overnight to one year. The shorter rates, i.e. up to 6 months, are usually quite reliable and tend to precisely reflect market conditions at measurement time. The actual rate at which banks will lend to one another will, however, continue to vary throughout the day. The British Bankers Association (BBA) is a trade association, which represents banks and other financial services firms, either British or foreign owned, that operate in the United Kingdom. ...
Apart from the US dollar and, of course Pound Sterling, currencies for which LIBOR is a significant reference rate currently include the Swiss Franc, the Yen, the Canadian dollar and the Danish Krone. UKP redirects here. ...
The franc (ISO 4217: CHF or 756) is the currency and legal tender of Switzerland and Liechtenstein. ...
Japanese 10 yen coin (obverse) showing Phoenix Hall of Byodoin Yen is the currency used in Japan. ...
The dollar (currency code CAD) has been the currency of Canada since 1858. ...
Danish coins The Danish krone is the currency used in Denmark and the Danish dependency of Greenland. ...
In the 1990s, Yen LIBOR rates were altered by credit problems affecting some, but not all, of the contributor banks. Japanese 10 yen coin (obverse) showing Phoenix Hall of Byodoin Yen is the currency used in Japan. ...
For a precise definition of BBA LIBOR, see the BBA website.
LIBOR-based derivatives
Eurodollar contracts The Chicago Mercantile Exchange's so-called Eurodollar contracts are based on three-month US dollar LIBOR rates. They are the world's most heavily traded short term interest rate futures contracts and extend up to 10 years. For the shorter maturities, fungible contracts trade on London's Euronext.liffe in European time and the Singapore Exchange in Asian time. asdguibsltfQEFJO;he traders to indicate their function on the floor (traders, runners, CME employees, etc. ...
In finance, the prefix euro as in eurodollars or euroyen refer to currency deposited outside the country of their origin. ...
Euronext. ...
Singapore Exchange (SGX) is the stock exchange in Singapore. ...
Interest Rate Swaps Interest rate swaps based on short LIBOR rates currently trade on the interbank market for maturities up to 50 years. A "five year LIBOR" rate refers to the 5 year swap rate vs 3 or 6 month LIBOR. "LIBOR + x basis points", when talking about a bond, will mean that the bond's cash flows have to be discounted on the swaps' zero-coupon yield curve shifted by x basis points in order to equal the bond's actual market price. In the field of derivatives trading, a popular form of swap is the interest rate swap, in which one party exchanges a stream of interest for another stream. ...
The US dollar yield curve as at 9 February 2005. ...
See also Euribor (Euro Interbank Offered Rate) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the euro wholesale (or interbank) money market. ...
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