“Time running out” for Libor transition, IA warns
UK fund managers have called on companies to take urgent action to ensure they stop issuing bonds using the Libor benchmark by the end of 2021 and has offered to work with them to agree on new reference rates.
The Investment Association (IA), which represents UK fund managers, has written to companies issuing Libor-linked sterling bonds, warning that there is a risk of “significant market disruption” if bonds still reference the Libor rate after the December 31 deadline imposed by the Financial Conduct Authority (FCA) and the Bank of England.
Data provided by the International Capital Markets Authority shows that the value of Libor-linked bonds yet to move to a new rate exceeds £108 billion.
Corporate bond issuers urged to quickly end link to LIBOR
Bloomberg
The Bank of England in London. U.K. companies are being encouraged to transition their bonds from LIBOR.
Managers in the U.K. called on corporations that issue bonds in pound sterling to expedite the transition away from LIBOR, which will be phased out Dec. 31.
About £108 billion ($147.7 billion) of bonds linked to the London interbank offered rate have yet to transition to a new benchmark rate, the Investment Association said in a letter Wednesday to FTSE 350 companies.
Companies should immediately transition the benchmark rate for their bonds from LIBOR to one of the recommended risk-free rates, the letter said. One example of a risk-free rate is the sterling overnight interbank average rate, known as SONIA.
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