The difference between three-month LIBOR and the overnight index swap rate (OIS rate). It is an indication of the amount of cash available for interbank lending. Typically, LIBOR is higher than the OIS rate, and the LIBOR-OIS measures the price of risk. When financial institutions swap interest rates, it is not a matter of lending and borrowing money; but rather a matter of exchanging the terms of their loans. LIBOR, by nature, represents the higher risk, and hence it usually has a higher rate. For example, if LIBOR equals 4.65 percent, and the OIS equals 3.75 percent, then the LIBOR-OIS spread would be 0.9 percent or 90 basis points. When credit is tight, this spread widens. And when the spread is increasing, this indicates that lenders perceive borrowers as posing a higher risk of default, therefore charge a higher interest rate to account for risk. On the other hand, when credit is easy, the LIBOR-OIS spread narrows. And a decreasing spread is an indicator that lenders perceive borrowers as a lower risk of default, and as such charge a lower rate corresponding to this lower level of risk.