Full "BOR"
Global Indices Resembling LIBOR

January 28, 2009 (updated June 14, 2010)

As you will read multiple times on the LIBORATED site, the LIBOR index is an average of interbank lending rates obtained from institutions selected from among the British Bankers’ Association’s members. By now you may be thinking, “That’s fine, but there is more to banking than just the British Bankers’ Association.” You may have just heard a collective gasp from Old Broad Street, site of the BBA’s London headquarters, but you would be right—there are other banks and markets to consider. That’s why LIBOR has cousin indices spanning the globe, operating in much the same fashion to provide a snapshot of borrowing costs and market moods.

Euribor^®

Euribor is the Euro Interbank Offered Rate. Like LIBOR, it is a benchmark of interbank lending rates. Also like the BBA’s index, Euribor is announced at 11 am and uses Reuters as a communications partner to broadcast the numbers.

Euribor originated on December 30, 1998, timed with the advent of the pan-European currency, the Euro. Previously, individual European markets had their own indices, such as PIBOR in Paris and FIBOR from Frankfurt. The European Banking Federation (EBF), representing 5000 European banks, and the Financial Markets Association (ACI) sponsor Euribor.

Banks quoting for Euribor® are selected on strict criteria, as are the “contributor banks” that create the rate mosaic for LIBOR. First-class credit standing and a diverse representation of the euro money market are the prerequisites for being on the “panel of banks” whose rates are the basis of the Euribor average.

TIBOR

TIBOR is the Tokyo Interbank Offered Rate. Like Euribor, TIBOR debuted in the 1990s, approximately one decade after LIBOR. It is a benchmark for unsecured interbank loans in the Japanese wholesale money market. Using a calculation method similar to LIBOR, TIBOR dispenses with the high and low extremes of source data in creating a filtered average of submitted rates. The Japanese Bankers Association (JBA) releases TIBOR daily at 11 am.

TIBOR rates come in two varieties: the Japanese Yen TIBOR rate and the Euroyen TIBOR rate. The Japanese Yen rate is derived from activity on the unsecured call market, where private financial institutions adjust short-term funding surpluses and shortfalls. The Euroyen rate depicts the Japan offshore market, established in 1986 “to further liberalize and internationalize Japanese financial markets.”

Similar to the composition of LIBOR and Euribor, a select group of institutions, known as “reference banks,” contribute the rate information for TIBOR. 16 banks are responsible for the Japanese Yen component, including The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Sumitomo Mitsui Banking Corporation. 17 banks are behind the Euroyen rate, including The Bank of Yokohama, Ltd. and Mitsubishi UFJ Trust and Banking Corporation. Reuters, Bloomberg Financial, and Thomson Corporation are among the information providers that disseminate TIBOR developments.

HIBOR

HIBOR is the Hong Kong Interbank Lending Rate. Like LIBOR, it is a filtered average of interest rates banks charge each other within the Hong Kong Association of Banks (HKAB). Also in LIBOR fashion, HIBOR has a separate index for each maturity from overnight to 1-year and is published every business day at the 11:00 hour.

HIBOR compiles rate quotes from 20 contributing banks including locally incorporated banks such as The Bank of East Asia, banks incorporated on the mainland such as China Construction Bank, Inc., and banks incorporated overseas including JP Morgan Chase and the Royal Bank of Scotland.

Dueling MIBORs

MIBOR stands for both the Mumbai Interbank Offered Rate and the Moscow Interbank Offered Rate. The Indian version originated in 1998 as an index of the overnight money market, growing to encompass other maturities—14-Day, One-Month, Three-Month. It functions as a benchmark for a number of financial instruments such as interest rate swaps and term deposits. (Thanks to reader C. Shivkumar for submission.)

In Russia, MIBOR is the Moscow Interbank Offered Rate, compiled by the Central Bank of Russia based on rates submitted by 30 institutions.

Almost a duel: SIBOR and SAIBOR

SIBOR and SAIBOR are two similar terms, the first standing for both the Singapore Interbank Offered Rate and the second for the Saudi Interbank Offered Rate. The Association of Banks in Singapore (ABS) sets SIBOR, which is more commonly used in Asia.

A “BOR” in Every Port

A number of major financial centers operate their own interbank offered rate indices, including:

Abu Dhabi: ADIBOR
Bahrain: BIBOR
Brussels: BRIBOR
Luxembourg: LUXIBOR
Madrid: MIBOR
Paris: PIBOR
Zurich: ZIBOR

 

 

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