Rate Manipulation Scandal Could Impact Construction Financing

Backlash from a recent interest rate manipulation scandal may have an effect on lending in markets where rates aren't fixed, including the construction industry

The recent Barclays Capital scandal, which shed light on rate manipulation, could possibly have an effect on construction lending that relies on LIBOR. LIBOR, or the London InterBank Offered Rate, is used as a benchmark interest rate for banks all over the world.

While the manipulation hasn't been large enough to impact LIBOR yet, construction contractors and project owners might benefit from asking their lending institutions how much more they had to pay in interest due to the Barclays scandal.

As public trust of the regulatory authority comes into questions and the government is calling for investigation into millions of debt offerings, distruptions may be felt more in segments where rates are not fixed, such as construction.

(More on how LIBOR may affect construction lending...)