Basis point (bps)

RECENT NEWS
The Economic Times  Jun 30  Comment 
According to Citigroup, there is a possibility of 25 basis points cut in 2015-16, while further easing would depend on 'real rate dynamics'.
MarketWatch  Jun 30  Comment 
The Bank of America Merrill Lynch U.S. High Yield Index was offering a 491 basis-point spread over Treasuries at Monday's close, placing it on track to climb above 500 basis points on Tuesday, the last trading day of the month, according to Marty...
The Hindu Business Line  Jun 30  Comment 
SEBI Chairman U K Sinha has said that the two basis points of assets under management (AUM) set aside by fund houses for investor education should be implemented seriously, else SEBI would be forc...
The Economic Times  Jun 8  Comment 
The rising NPA estimate for FY16 is primarily driven by a greater proportion of assets restructured in the past slipping into NPAs again, Icra said.
The Economic Times  Jun 2  Comment 
Crisil today cut its FY16 growth estimate by 0.5 per cent to 7.4 per cent, saying a second consecutive year of less rainfalls will hurt the economy.
The Times of India  Jun 1  Comment 
Leading economists have joined the government in calling for a rate cut by Reserve Bank of India in its second monetary policy review on Tuesday.
The Hindu Business Line  May 19  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  May 19  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).




 

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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