Buy-side calls for greater urgency in meeting LIBOR-transition deadlines
22 June 2021 UK
Image: Roger de Montfortv/adobe.stock.com
The Investment Association (IA) has highlighted a need to tackle a large number of outstanding bonds linked to LIBOR which have not yet transitioned to a new benchmark, despite impending deadlines for the end of all panel bank LIBOR settings.
The IA published a letter on behalf of its members earlier in 2021 spelling out the potential disruption to the market that could be caused by delaying this transition.
Asset managers have argued that other participants in the market must step up their efforts to ensure that the transition to a new benchmark for LIBOR-linked bonds is fulfilled before the deadlines.
All LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the one-week and two-month US dollar settings.
LIBOR settings will cease immediately after 30 June 2023 in the case of the remaining US dollar settings.
IA director for investments and capital markets Galina Dimitrova says: “Our members have already been instrumental in encouraging the active transition away from LIBOR. We are therefore encouraging broader market participants to align themselves with the buy-side, to help accelerate this much needed transition before the end of the year.”
The IA has published guidance for issuers and sell-side firms, entitled A Framework for Success, which details expectations that the investment management community has from the LIBOR-transition process and its proposals for securing consent from other market participants.
“However, this is not a process that can be driven by one part of the market,” says the IA.
It is therefore calling on firms market-wide to ensure effective collaboration and a successful transition by the end of December for all LIBOR-settings embraced by this deadline.
The IA published a letter on behalf of its members earlier in 2021 spelling out the potential disruption to the market that could be caused by delaying this transition.
Asset managers have argued that other participants in the market must step up their efforts to ensure that the transition to a new benchmark for LIBOR-linked bonds is fulfilled before the deadlines.
All LIBOR settings will either cease to be provided by any administrator or no longer be representative immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen settings, and the one-week and two-month US dollar settings.
LIBOR settings will cease immediately after 30 June 2023 in the case of the remaining US dollar settings.
IA director for investments and capital markets Galina Dimitrova says: “Our members have already been instrumental in encouraging the active transition away from LIBOR. We are therefore encouraging broader market participants to align themselves with the buy-side, to help accelerate this much needed transition before the end of the year.”
The IA has published guidance for issuers and sell-side firms, entitled A Framework for Success, which details expectations that the investment management community has from the LIBOR-transition process and its proposals for securing consent from other market participants.
“However, this is not a process that can be driven by one part of the market,” says the IA.
It is therefore calling on firms market-wide to ensure effective collaboration and a successful transition by the end of December for all LIBOR-settings embraced by this deadline.
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