Today's LIBOR Rates
1 M |
0.25781 |
 |
3 M |
0.29281 |
|
6 M |
0.49363 |
|
1 YR |
0.83488 |
|
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June 12, 2010
This week saw LIBOR level off after increases that have marked much of Q2 2010. Higher LIBOR rates have been a direct reflection of bank worries over the eurozone debt crisis. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for unsecured, short-term loans.
The week began with more uncertainty as the LIBOR/OIS Spread widened in U.S. Dollars and the Euro. The LIBOR/OIS Spread compares rates for Three-Month LIBOR with an anticipated monthly average of central bank overnight rates. A wider spread means LIBOR is diverging from the historically more stable OIS component, denoting less bank willingness to lend. iMarketNews.com reported that Hungary was possibly adding itself to the list of “peripheral” eurozone countries —Greece, Spain, Portugal—facing debt default. Per its article, LIBOR/OIS Spread in Euros was 24.550 basis points; LIBOR/OIS in U.S. Dollars was 31.219 basis points.
On Tuesday, The Wall Street Journal reported a drop in Three-Month U.S. Dollar LIBOR (0.53688%) and rises in Three-Month LIBOR for the Euro and British Pound Sterling (0.65% and 0.72719% respectively). The article also noted the significance of widening LIBOR/OIS Spreads but remarked that they remained well below the record gap of Fall 2008, 366 basis points, which followed Lehman Brothers’ collapse.
At midweek, Bloomberg BusinessWeek noted that U.S. Dollar LIBOR had begun leveling off, an indicator that banks were becoming less resistant to lending. The Irish Independent noted what The Wall Street Journal and LIBORATED.com have been saying: LIBOR is the leading barometer of marketing mood and direction.
The Wall Street Journal’s MarketBeat blog held off on any declaration of market fears being over until Three-Month Euro LIBOR drops and hold steady. Financial Times noted that Three-Month EURIBOR, an interbank lending index similar to Three-Month LIBOR, was several points higher than the corresponding LIBOR figure, an uncharacteristic divergence attributed to market stresses caused by the eurozone debt crisis.
At the end of the week, iMarketNews.com noted contractions in the LIBOR/OIS Spread for the Euro (24.38 basis points) and British Pound Sterling (24.225 basis points), with Three-Month Euro LIBOR dropping and Three-Month Sterling LIBOR holding steady. At the same time, Bloomberg BusinessWeek noted an increase in the margin above LIBOR for the 15 most actively traded loans, a 32 basis point increase to 478 basis points over Three-Month LIBOR. This rise came after borrowing costs had eased from the year’s high of 483 basis points over Three-Month LIBOR on May 20.