Basis Point | Practical Law

Basis Point | Practical Law

Basis Point

Basis Point

Practical Law Glossary Item 3-382-3263 (Approx. 2 pages)

Glossary

Basis Point

Sometimes referred to as "bips." A basis point is one one-hundredth of a percent (0.01%). For example, 100 basis points equals 1.0%. The term is often used in finance transactions in connection with the calculation of fees and changes in interest rates for derivatives contracts, as well as yields on fixed-income obligations such as asset-backed securities (ABS).
Example: Term SOFR plus 25 basis points = Term SOFR plus 0.25%.