BUBOR

BUBOR, which stands for Budapest Interbank Offered Rate, was a benchmark interest rate for the Hungarian interbank market. It was calculated based on the rates at which a panel of banks in Budapest reported they could borrow unsecured, short-term loans from one another. BUBOR served as a reference rate for a wide range of financial products, including loans, derivatives, and bonds, both within Hungary and internationally. Its calculation was overseen by the Hungarian National Bank (MNB).

The calculation of BUBOR involved a panel of banks submitting their daily borrowing rates. These submissions were then processed to determine the BUBOR rate for various tenors, typically ranging from overnight to one year. The methodology aimed to reflect the actual cost of unsecured funding for banks.

In recent years, there has been a global trend towards reforming benchmark interest rates to improve their robustness and reduce reliance on submissions that could be susceptible to manipulation. As part of this global shift and to enhance the reliability of Hungarian benchmark rates, BUBOR was replaced by HICC_ONIA (Hungarian Overnight Interest Rate Average) on January 1, 2022. HICC_ONIA is an overnight rate based on actual transaction data from the secured interbank market, making it a more robust and transaction-based benchmark.