LIBOR

(noun)

The London Interbank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borrowing from other banks.

Related Terms

Examples of LIBOR in the following topics:

  • Floating-Rate Bonds

    • ., LIBOR), plus a quoted spread.
    • Floating rate bonds (FRBs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a quoted spread (i.e., quoted margin).
    • A typical coupon would look like three months USD LIBOR +0.20%.

  • Coupon Interest Rate

    • It can also vary with a money market index, such as LIBOR, or it can be even more exotic.
    • Floating rate notes (FRNs, floaters) have a variable coupon that is linked to a reference rate of interest, such as LIBOR or Euribor.
    • For example, the coupon may be defined as three month USD LIBOR + 0.20%.

  • Corporate Policies

    • The 2012 Barclays LIBOR price fixing scandal is an example of grossly unethical behavior that occurred after Barclays admitted that its traders sought to intentionally manipulate LIBOR rates for financial gain.

  • Provisions of Preferred Stock

    • An example of this would be tying the dividend rate to LIBOR.

  • Other Types of Bonds

    • Floating rate notes (FRNs, floaters) have a variable coupon that is linked to a reference rate of interest, such as LIBOR or Euribor.
    • For example the coupon may be defined as three month USD LIBOR + 0.20%.

  • Characteristics of Bonds

    • It can also vary with a money market index, such as LIBOR, or it can be even more exotic.

  • Common and Preferred Stock

    • This means that they may change according to a benchmark interest-rate index (such as LIBOR).

  • Long-Term Debt

    • The interest rate paid on these varies depending on some index, such as LIBOR.

  • Short-Term Loans

    • These instruments are often benchmarked to the London Interbank Offered Rate (LIBOR) for the appropriate term and currency.

  • Types of Bonds

    • Also known as FRNs or floaters, these have a variable coupon that is linked to a reference rate of interest, such as LIBOR or Euribor.