LIBID

LIBID, or the London Interbank Bid Rate, is a historical label for the rate at which a bank or dealer indicated it was willing to borrow funds in the London interbank market. It represents the bid side of a quoted funding market, in contrast with the offered side represented by LIBOR-era rates.

LIBID was not one universally standardized, administrator-published benchmark with a single official formula. In a legacy security, swap, valuation policy, or investment mandate, the governing document’s definition controls the contributing banks, currency, tenor, observation time, data source, and calculation method.

Key Takeaways

• LIBID describes the bid side of historical London interbank funding quotations.
• It was generally below the corresponding offered rate because a bid-offer spread separated borrowing and lending quotations.
• There is no safe universal rule that LIBID always equals LIBOR minus a fixed number of basis points.
• LIMEAN was a related legacy midpoint label, but its exact contractual definition must be verified rather than assumed.
• All LIBOR settings permanently ceased by September 30, 2024, so LIBID- or LIMEAN-linked documents require careful source and fallback review.

Bid, Offer, and Midpoint

In a two-way rate quotation:

• the bid rate is the rate at which the quoting institution is willing to take or borrow funds
• the offered rate is the rate at which it is willing to provide or lend funds
• the spread is the difference between the offered and bid rates
• a midpoint is halfway between the two quoted sides

The general relationship is:

Some historical documents used LIMEAN or a similar label for a mean or midpoint between London interbank bid and offered rates. If a document defines the midpoint that way, the calculation is:

That equation is a midpoint calculation, not proof that every instrument used the same LIMEAN convention. The document may specify its own rates, source pages, rounding, or dealer-determination process.

Worked Example: Reading a Historical Quote

Suppose an archived term sheet defines its bid-side rate from a two-way quotation:

• offered rate: 5.20%
• bid rate: 5.10%

The bid-offer spread is:

If the same term sheet explicitly defines its mean rate as the midpoint, that value would be:

For a $10 million, 90-day placement accruing at the 5.10% bid rate on an Actual/360 basis, illustrative interest would be:

The example demonstrates the quote mechanics only. A real instrument may use different dates, currencies, day counts, rounding, or fallback provisions.

Why LIBID Appears in Financial Documents

LIBID can appear in older documents where a bid-side funding rate was considered more appropriate than an offered rate. Examples may include:

• valuation rules for deposits or short-term instruments
• investment-management agreements and performance calculations
• collateral or financing schedules
• structured securities and swap documentation
• internal transfer-pricing or historical market-data series

Its purpose depends on the instrument. A bid-side rate may reflect the return available to a funds provider, while an offered-side rate may reflect the cost faced by a funds taker. This distinction is economically useful, but the label alone does not identify an executable transaction or an official fixing.

LIBID, LIMEAN, and LIBOR Compared

These labels should not be treated as a current, continuously published three-rate family. Their relationships were often conventions used in a particular data service, contract, or valuation policy.

Why a Fixed Spread Assumption Is Unsafe

The shorthand formula LIBID = LIBOR - spread describes a quote relationship, but it does not establish the spread. The difference could vary with:

• currency and tenor
• market liquidity
• bank credit conditions
• observation time
• source and contributor set
• rounding and calculation rules

Using a hard-coded spread without contractual support can create valuation and settlement errors. If a legacy model contains an assumed offset, trace it to the model documentation or governing agreement.

Legacy Contract Review

When LIBID or LIMEAN appears in an older instrument, identify:

1. Defined term: Copy the complete definition, including any referenced schedule.
2. Currency and tenor: Do not infer them from the acronym.
3. Source: Determine whether the rate came from a screen page, named banks, a calculation agent, or another source.
4. Fixing time: Confirm the time zone, business-day rule, and lookback.
5. Fallback: Check what applies if the source is unavailable or the benchmark has ceased.
6. Calculation agent: Identify who has discretion and what standard governs that discretion.
7. Amendments: Review later notices, consents, benchmark-replacement supplements, and regulatory changes.

Because LIBOR has ended, a document that still displays a LIBID or LIMEAN formula may not describe the rate currently used for payment. An amendment or statutory replacement may have changed the operative benchmark.

Common Mistakes

• Describing LIBID as a currently published companion benchmark to LIBOR.
• Assuming a universal five- or ten-basis-point discount from LIBOR.
• Defining LIMEAN as an average of daily, weekly, or monthly panel-bank submissions without documentary support.
• Treating a midpoint as a directly tradable rate.
• Applying a historical quote after the relevant source has ceased.
• Ignoring currency, tenor, day count, fixing date, and calculation-agent discretion.
• Relying on a glossary definition instead of the operative contract language.

Sources and Further Reading

• Bank of England, The end of LIBOR
• SEC filing example defining LIBID contractually
• IOSCO, Principles for Financial Benchmarks

The SEC filing is an example of contract-specific usage, not a universal LIBID methodology.

Related Terms

• LIBOR: The discontinued offered-rate benchmark family associated with the historical London interbank market.
• IBOR: The broad family label for interbank offered-rate benchmarks.
• Bid-offer spread: The difference between the quoted bid and offer.
• Benchmark Rate: A standardized reference used in pricing, valuation, or settlement.
• Basis Point: One hundredth of one percentage point.

FAQs

This article provides general financial education, not investment, valuation, accounting, tax, or legal advice. For a live obligation, use the governing documents, amendments, applicable law, and qualified professional review.