London Interbank Offered Rate (LIBOR)
An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year. Investopedia Says:
The LIBOR is the world's most widely used benchmark for short-term interest rates. It's important because it is the rate at which the world's most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based. For example, a multinational corporation with a very good credit rating may be able to borrow money for one year at LIBOR plus four or five points.
Countries that rely on the LIBOR for a reference rate include the United States, Canada, Switzerland and the U.K. Related Terms:
British Bankers Association - BBA
Emirates Interbank Offered Rate - EIBOR
Euro Interbank Offer Rate - EURIBOR
Euro LIBOR
Euro Overnight Index Average - EONIA
Interbank Rate
Johannesburg Interbank Agreed Rate - JIBAR
London Interbank Bid Rate - LIBID
London Interbank Mean Rate - LIMEAN
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