(Bloomberg) — USD Libor-OIS spread widens to 41.8bp, widest since October 2016 and near the 43.7bp reached in September 2016 as the markets prepared for the SEC’s money-market reforms.
While the pace and scale at which Libor has set higher “seems unsustainable over the near term,” bank issuers have a “decent amount” of CP/CD borrowings coming due during March, which should keep upward pressure on funding cost.
The term London interbank offer rate (Libor) is the rate at which banks indicate they are willing to lend to other banks for a specified term of the loan. The term overnight indexed swap (OIS) rate is the rate on a derivative contract on the overnight rate. (In the United States, the overnight rate is the effective federal funds rate).
Yes, rate increases from The Fed are setting LIBOR rates into orbit.
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