Basis point (bps)

RECENT NEWS
The Hindu Business Line  8 hrs ago  Comment 
The cut-off yield at the upcoming auction of the new 10-year government security (GS) could be almost 10 basis points lower than the yield on the extant benchmark security, say market players.
The Hindu Business Line  11 hrs ago  Comment 
Bank of America Merrill Lynch (BofAML) expects the Reserve Bank of India Governor Raghuram Rajan to cut policy rates by 25 basis points on June 2, the next scheduled policy review meeting.
The Economic Times  May 12  Comment 
The post-crisis fiscal consolidation experience of the states indicates erosion of revenue surpluses particularly in 2013-14 (revised estimates).
The Hindu Business Line  May 6  Comment 
Bank of Baroda has reduced its base rate (or the minimum lending rate) by 25 basis points from 10.25 per cent to 10 per cent with effect from May 6. This comes nearly a month after the Res...
The Hindu Business Line  Apr 24  Comment 
Credit pick up to happen in next 6 months: CMD
The Hindu Business Line  Apr 23  Comment 
City-based UCO Bank has reduced its base rate by 25 basis points (0.25 per cent) to 9.95 per cent with effect from May 1, this year. Interest rate on deposits across all tenors has also b...
The Economic Times  Apr 15  Comment 
"Under Steel Strips Wheels' agreement with Escorts, we are expecting that the turnover will jump by 80% in the next one year."
The Hindu Business Line  Apr 1  Comment 
To enhance employability and augment talent supply for the BPS (Business Process Services) industry, IT services company – Tata Consultancy Services is collaborating with colleges. Collab...
The Economic Times  Mar 31  Comment 
The Noida-based firm said its EBIT (operating earnings) is also expected to be negatively affected by 80 basis points.
The Economic Times  Mar 17  Comment 
As the economy picks up, as investment cycle picks up and as GST comes in, the logistics space will have an important role to play, believes Agarwal.




 

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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