Formerly and informally a guess at the interest rate at which large banks of good credit standing might be expected to offer to lend to other such banks in the London inter-bank short-term, unsecured money market at a particular time and in a particular currency.
Use of this term is deprecated.
LIBID was formed as a kind of analogy to LIBOR – originally an acronym for London Inter-Bank Offered Rate.
One might expect LIBID to be a lower rate than LIBOR but as the term is informal such distinctions are blurred and conceptually a large bank of high credit standing is on both sides of a LIBOR-LIBID deal at the same rate.
As there is no observed rate, informally LIBID is often taken as 1/8th % less than LIBOR.
In analogy with London Inter-Bank Offered Rate, LIBID is sometimes expanded as London Inter-bank Bid rate.