List of Financial Market Terms

The LIBOR-OIS spread is used to measure the health of the banking system (one of many tools used to accomplish that goal).  It essentially portrays the amount of perceived credit risk in the interbank lending market.  The lower the spread, the lower the concerns about credit risk.

The spread is the difference between London Interbank Offered Rate (LIBOR) and the overnight indexed swap (OIS) rate.

LIBOR OIS spread chart

Source: financialstability.com

Related terms: TED Spread

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