Article submitted by Bob Kirby, Commercial Investment Specialist for Saurage Rotenberg Commercial Real Estate

Written by CIRE Magazine, September – October 2012

The recent debacle involving manipulation of the London Interbank Offered Rate caused many to wonder what exactly it is. This benchmark interest rate used throughout the world’s financial systems is determined by the British Bankers Association, according to Every day at 11 a.m., 20 of the world’s largest banks submit interest rate data involving 10 currencies for 15 different loan terms. “The BBA then throws out the top 25 percent of quotes and the bottom 25 percent, and takes the average of the remainder,” says Wharton finance professor Richard J. Herring. “This makes it seem highly unlikely that any one bank could manipulate the rate, but on closer inspection, it is possible.”

While less accurate than other benchmarks, Libor has persisted out of tradition and the fact that it incorporates risk into its assessment. “[Libor] is intended to reveal the banks’ real cost of money, incorporating all the market’s up-to-the-minute assessments of the risk of lending to the participating banks. In contrast, a U.S. Treasury bond rate, while set more transparently, does not include default risk. …so the two rates reflect a different set of concerns,” reports Knowledge@Wharton. Find out what alternatives might replace Libor by reading “The Libor Mess: How Did It Happen— and What Lies Ahead?” at

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Bob Kirby, a commercial leasing and sales consultant with Saurage Rotenberg Commercial Real Estate, has over 37 years of sales and management experience.  Licensed in Louisiana and Mississippi, Bob is a member of the Mississippi Commercial Association of REALTORS® (MCAR); the Greater Baton Rouge Association of REALTORS® Commercial Investment Division; a candidate member of the Certified Commercial Investment Member Institute (CCIM); and an affiliate member of the National Association of REALTORS® (NAR) and NAR Commercial.

Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).