Practical Law Glossary Item 4-382-3446 (Approx. 2 pages)
Glossary
Eurodollar Rate
Also known as LIBOR rate. This rate is equal to the Eurodollar base rate, adjusted for the maximum reserve requirements lenders are required to maintain on their Eurodollar deposits. This is a standard formula that is included in most loan agreements and is typically drafted as follows: Eurodollar Base Rate divided by (1.00-Eurocurrency Reserve Requirements). This rate is higher than the Eurodollar base rate. Following the 2008 financial crisis, this rate was used to compensate for the fall in the base rate and to take advantage of any increases in the Eurocurrency reserve requirement. The LIBOR rate has been phased out as a reference rate.