LIBOR, which stands for London Interbank Offered Rate, was a widely used benchmark interest rate that represented the average rate at which major global banks anticipated they could borrow from one another in the interbank market. It was calculated and published daily for different currencies and different loan durations. LIBOR played a fundamental role in the global economy and was used as a reference rate for various financial instruments, including bonds, loans, and derivatives.

For instance, a corporate loan agreement might state that the interest rate to be charged is LIBOR plus a fixed margin. This means that the interest calculation is based on the LIBOR rate for a specific term and currency at the time the loan rate is set.

However, it is important to note that LIBOR is being phased out, and its publication ceased for most tenors at the end of 2021, with outstanding tenors ending in mid-2023. Alternative reference rates like SOFR (Secured Overnight Financing Rate) in the U.S. are now being adopted to replace LIBOR in many financial contracts and instruments.

The transition away from LIBOR is a key topic in the financial industry, and entities have been preparing for this change to ensure smooth adjustments to the new benchmark rates.