Libor stands for London interbank offered rate. It refers to any of a number of short-term indicative interest rates compiled by the British Bankers Association (BBA) at 11:00 AM London time each business day. For a given currency and maturity, Libor represents the simple interest rate at which banks are willing to lend Eurocurrency (i.e. Eurodollars, Euroyen, etc.) to each other. Because the loans are structured as deposits, Libor is called a deposit rate. As a practical matter, it is the interest rate at which the most highly-rated banks can borrow. Libor is quoted for very short term and monthly maturities out to a year for the world's major currencies. GBP Libor is quoted for a cash loan on an actual/365 basis. For all other currencies, it is quoted for a spot loan on an actual/360 basis. Spot is defined as two business days (two "target" days for the euro). Rates are available from Telerate news service page 3750. Libor rates are widely used as underlying interest rates for derivative contracts. Use of the term "Libor" can be confusing. Usually, it refers to the indicative rates compiled by the BBA. It may also refer to any rate offered by one bank to another on a deposit. To avoid confusion, people may speak of BBA Libor when referring to the BBA's indicative rates.
As with most markets, the money markets have bid-offer spreads. Libor rates are offered rates. Libid rates are bid rates. Libid stands for London interbank bid rate. These are the rates banks bid for deposits. As a practical matter, Libid is a rate other banks can expect to receive if they deposit excess cash. The BBA does not compile indicative Libid rates. Limean is the mid-market rate—the average of Libor and Libid. Euribor stands for Euro interbank offered rate. These interest rates for the Euro are compiled by the European Banking Federation (FBE—Fédération Bancaire de l’Union Européenne) and are released at 11:00 AM Brussels time, each business day. Rates are quoted for one week and monthly maturities out to a year. They are available on Telerate page 248. Euribor is more widely used than Euro Libor.
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