PRIBOR (Prague Inter Bank Offered Rate)

The Prague Inter Bank Offered Rate (PRIBOR) is the average rate at which banks are willing to lend liquidity on the Czech interbank money market and as such reflects the price of money on the market.

PRIBOR is the equivalent of LIBOR for the UK market and EURIBOR for the European market.

PRIBOR was created in Czechoslovakia in 1992 by the Central Bank of Czechoslovakia. Following the split of the state in 1993, the process of calculating PRIBOR was taken over by the newly formed Czech National Bank. The Czech National Bank, in turn, was responsible for calculating PRIBOR until the transfer of the role of calculation agent to the American company Telerate around the year 2000. Later Telerate was bought by Reuters in 2005.

On 11 December 2018 CFBF (Czech Financial Benchmark Facility) was authorized as administrator under the European Benchmark Regulation (BMR), which means that PRIBOR became one of the first benchmarks to be authorized under the BMR extension. The reason for this was that allegations were made in 2015 that so-called benchmark banks manipulated the rate for their own gain and that such changes would result in higher lending revenues. Ministers ordered the central bank to investigate and as a result, in July 2017, PRIBOR was transferred to the Czech Financial Benchmark Facility, operated by Global Rate Set Systems, the international rate-setting specialist.

PRIBOR is set daily and it is used in a wide range of financial instruments, including standard interbank products such as FRAs, Interest Rate Swaps and others. There are 4 types of PRIBOR depending on the time horizon: 1M PRIBOR, 3M PRIBOR, 6M PRIBOR and 12M PRIBOR. An example can be found here.

While an example of a PRIBOR rate bond can be consulted here: Hypotecni banka, FRN 12dec2023, CZK, CZ0002006000.