Also known as LIBOR (www.practicallaw.com/0-382-3580) rate. This rate is equal to the Eurodollar base rate, adjusted for the maximum reserve requirements lenders are required to maintain on their Eurodollar deposits. This is a standard formula that is included in most loan agreements and is typically drafted as follows: Eurodollar Base Rate divided by (1.00-Eurocurrency Reserve Requirements (www.practicallaw.com/6-382-3445)). This rate is higher than the Eurodollar base rate. Following the financial crisis, this rate has been used to compensate for the fall in the base rate (www.practicallaw.com/7-382-3261)and to take advantage of any increases in the Eurocurrencv reserve requirement.
For more information on Eurodollar Rate/LIBOR and examples of loan agreement Eurodollar Rate/LIBOR provisions, see Standard Clauses, Loan Agreement: Borrowing Mechanics (www.practicallaw.com/3-383-6717) andPractice Note, What's Market: Eurodollar Rate/LIBOR Interest Rate Provisions (www.practicallaw.com/8-385-8146).