The three-month London interbank offered rate for dollars fixed for the final time on Friday, ending 50 years as a global benchmark.
(Bloomberg) — The three-month London interbank offered rate for dollars fixed for the final time on Friday, ending 50 years as a global benchmark.
The rate for lending between banks rose roughly 1.2 basis points to 5.54543%. The spread of Libor over overnight index swaps — once a barometer of funding pressure — was wider at 26.6 basis points.
Despite its entrenchment in the global financial system, Libor had faded long before the June 30 fixing. Derivatives linked to the discredited benchmark were phased out in April, when eurodollar futures and options — for decades the bread and butter of those wagering on Fed decisions or hedging moves in short-term interest rates — mostly ceased to exist.
“I will not miss those later days after underlying volumes had completely dried up and walking in the door to a dozen questions about why Libor had randomly dropped 4bp with zero macro catalysts,” said Blake Gwinn, head of US rates strategy at RBC Capital Markets. “Big thematic moves were one thing, but there were also lots of one off changes that were so idiosyncratic and so opaque.”
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