LIBOR
The “London inter-bank offer rate” is the rate of interest at which banks borrow funds, in marketable size, from other banks in the London inter-bank market. In other words, LIBOR is the international rate at which the world’s most preferred borrowers are able to borrow money. Accordingly, LIBOR is also used as a benchmark rate upon which rates for less preferred borrowers are based. For example, a large company with a very good credit rating may be able to borrow money for one year at LIBOR plus 5 basis points.