LIBOR Thaw Bullish for Investment Grade

Corporate Bonds 0 comments

To be sure, this key lending rate affecting trillions of dollars in loans has started to finally track the decline in the Federal Reserve’s target Fed Funds rate. On Tuesday, the Fed cut its Federal Funds rate to a target range of 0.25% to 0%, even lower than the Bank of Japan’s current 0.30% target rate.Despite the plunge in LIBOR lately most banks continue to hoard cash, including those institutions that have recently received government capital through TARP, or the Troubled Asset Relief Program. This suggests that even a lower LIBOR rate isn’t encouraging lending.