What does LIBOR stand for?

LIBOR stands for London Interbank Offered Rate. It is a benchmark interest rate that represents the average rate at which major global banks are willing to lend to one another in the international interbank market. LIBOR is calculated for different maturities and is published daily, serving as a key reference for a wide variety of financial products, including derivatives, bonds, and loans.

This rate is significant in leveraged finance because it often serves as the base rate for floating rate debt instruments, which are common in leveraged buyouts and other financing scenarios. LIBOR influences borrowing costs and investment decisions, making it crucial for financial market participants to understand.

The other options provided do not accurately reflect the definition or the purpose of LIBOR. For instance, "Long-term Interbank Offered Rate" misrepresents LIBOR as it is not exclusively a long-term rate, while "London International Borrowing Rate" and "Low Interest Borrowing Rate" do not capture the established financial market meaning and significance of LIBOR.