I understand LIBOR rates quoted on a daily basis upto 12 M tenors. But how are rates beyond 12M tenor estimated. I got this question from an interviewer.
closed as off-topic by noob2, LocalVolatility, amdopt, Helin, Quantuple Aug 29 '17 at 14:48
This question appears to be off-topic. The users who voted to close gave this specific reason:
- "Basic financial questions are off-topic as they are assumed to be common knowledge for those studying or working in the field of quantitative finance." – noob2, LocalVolatility, amdopt, Helin, Quantuple
If you want to estimate interbank lending rates beyond 12 months, the best you can do is look at where bonds issued by banks are trading.
Sometimes there is loose talk (even by interviewers) that may confuse this with long term swap rates, which are contracts to exchange a fixed rate for 3 or 6 month libor. However this has nothing to do with bank lending beyond 12 months.