LIBID
Encyclopedia
The London Interbank Bid Rate (LIBID) is a bid
rate; the rate bid by banks on Eurocurrency
deposits (i.e., the rate at which a bank is willing to borrow from other banks). It is "the opposite" of the LIBOR
(an offered, hence "ask" rate, the rate at which a bank will lend). Whilst the British Bankers' Association
set LIBOR rates, there is no correspondent official LIBID fixing.
Conventional wisdom used to assert that a LIBID rate could be calculated by subtracting a fixed amount (often given as ⅛th of 1%) from the prevailing BBA
LIBOR
rate, however this is no longer the case as bid/offer spreads have tightened in recent years. Additionally, it cannot be the case that the LIBOR / LIBID spread is always ⅛th of 1% for all maturities and all currencies all the time.
Bid-offer spread
The bid–offer spread for securities is the difference between the prices quoted for an immediate sale and an immediate purchase...
rate; the rate bid by banks on Eurocurrency
Eurocurrency
Eurocurrency is the term used to describe deposits residing in banks that are located outside the borders of the country that issues the currency the deposit is denominated in...
deposits (i.e., the rate at which a bank is willing to borrow from other banks). It is "the opposite" of the LIBOR
London Interbank Offered Rate
The LIBOR rate is the average interest rate that leading banks in London charge when lending to other banks. It is an acronym for London Interbank Offered Rate Banks borrow money for one day, one month, two months, six months, one year etc. and they pay interest to their lenders based on...
(an offered, hence "ask" rate, the rate at which a bank will lend). Whilst the British Bankers' Association
British Bankers' Association
The British Bankers’ Association is the trade association which represents the banks operating within the United Kingdom.-History:It was set up in 1919. In 1972 it accepted foreign banks...
set LIBOR rates, there is no correspondent official LIBID fixing.
Conventional wisdom used to assert that a LIBID rate could be calculated by subtracting a fixed amount (often given as ⅛th of 1%) from the prevailing BBA
British Bankers' Association
The British Bankers’ Association is the trade association which represents the banks operating within the United Kingdom.-History:It was set up in 1919. In 1972 it accepted foreign banks...
LIBOR
London Interbank Offered Rate
The LIBOR rate is the average interest rate that leading banks in London charge when lending to other banks. It is an acronym for London Interbank Offered Rate Banks borrow money for one day, one month, two months, six months, one year etc. and they pay interest to their lenders based on...
rate, however this is no longer the case as bid/offer spreads have tightened in recent years. Additionally, it cannot be the case that the LIBOR / LIBID spread is always ⅛th of 1% for all maturities and all currencies all the time.