LIBOR Flat

DEFINITION of 'LIBOR Flat'

An interest rate benchmark used to establish the floating interest rate that is paid on the notional principal in an interest-rate swap. LIBOR flat has no spread added to it and represents the best interest rate available in the current market. It is the most common reference on which other interest rates are based.

BREAKING DOWN 'LIBOR Flat'

LIBOR is the London Interbank Offered Rate, an interest rate at which banks can borrow money from each other. The rate changes daily. Often, a spread is added to LIBOR. This is an additional percentage of interest that reflects the risk of lending to a particular borrower. LIBOR flat has no spread added to it and represents the best interest rate available in the current market. It is the most common reference on which other interest rates are based.

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