The LIBOR, or London Inter-bank Offered Rate, is the average of what top banks in the City would charge to loan to each other. It’s a key indicator of financial markets and economic trends in general.
We’ve noticed a strong recent shift in this indicator, and we believe that it will have particular impact on highly-leveraged business deals – not unlike those pursued by private equity firms. Also, it should be noted that it also underpins around $350 trillion in derivatives. This was the subject of a scandal back in 2008.
Looking back as far as 1999, fluctuations in the LIBOR can be portentous of major world events.
We’re keeping an eye on this one.