Basis Point (BPS)

RECENT NEWS
The Hindu Business Line  Feb 6  Comment 
IDBI Bank today said it has reduced its marginal cost of funds based lending rate (MCLR) by 30-35 basis points across various tenors, effective February 1. For overnight tenor, the bank has reduced i...
Motley Fool  Feb 4  Comment 
Mortgage rates were slightly higher on Friday. Meanwhile, the U.S. economy added 227,000 jobs in the month of January, beating expectations and providing evidence that the "Trump effect" on animal spirits has had an early economic impact.
The Times of India  Feb 1  Comment 
The proposed merger between Vodafone and Idea can fetch the combined entity upto 350 bps in cost savings, even though the move is unlikely to lead to better pricing power for operators in the short-term, says a report.
The Hindu Business Line  Jan 13  Comment 
Axis Bank on Friday announced a 65-70 basis points cut in its marginal cost of fund-based lending rate (MCLR) across tenors with effect from January 18. Following the cut, the private sector bank'...
Motley Fool  Jan 9  Comment 
The main fixed-rate mortgage rates are lower on Monday relative to a week prior; meanwhile, Federal Reserve Bank of Boston president Eric Rosengren says the economy is near its sweet spot, requiring "a more regular increase" in the Fed's policy...
Reuters  Jan 4  Comment 
HDFC Bank Ltd is set to cut its marginal cost of funds-based lending rates (MCLR) across maturities by 75 to 90 basis points, effective Jan. 7, a source with direct knowledge said on Wednesday.
Clusterstock  Jan 3  Comment 
The US Treasury complex is opening up 2017 the same way it spent much of the final two months of 2016, lower. Early selling has taken hold as risk assets across the globe rally on the first trading day of the new year. The weakness has run...
The Hindu Business Line  Jan 2  Comment 
Also cuts MCLR rates for other maturities
The Economic Times  Jan 2  Comment 
According to Bank of America Merrill Lynch (BofA-ML), lending rate cuts will cushion the hit from the demonetisation shock in the second half of 2017.
Reuters  Jan 1  Comment 
State Bank of India, the country's biggest lender by assets, said on Sunday it had cut its lending rates by 90 basis points for maturities ranging from overnight to three-year tenures, after experiencing a surge in deposits.




 

For the article on the company with ticker BPS, see BlackRock Pennsylvania Strategic Municipal Trust (BPS).

A basis point (abbreviated as 'bps' and sometimes pronounced "bips") is a unit that is equal to 1/100th of 1%, and is often used instead of percentages when discussing interest rates, rates of return, and other percentage-based performance metrics that can occur as fractions of a percent. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security.

It is common practice in the financial industry to use basis points to denote a rate change in a financial instrument, or the difference (spread) between two interest rates, including the yields of fixed-income securities.

1% change = 100 basis points, and 0.01% = 1 basis point.

So, a bond whose yield increases from 5% to 5.5% is said to increase by 50 basis points; or interest rates that have risen 1% are said to have increased by 100 basis points. The marginal effect of each basis point change in the value of long term bonds can be very significant for this reason changes are tracked by basis points or 1/100th of 1%

Since certain loans and bonds may commonly be quoted in relation to some index or underlying security, they will often be quoted as a spread over (or under) the index. For example, a loan that bears interest of 0.50% per annum above the London Interbank Offered Rate (LIBOR) is said to be 50 basis points over LIBOR, which is commonly expressed as "L+50bps" or simply "L+50"

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