Libor Transition: No please I insist, you go first
It's not easy taking a dive into the unknown. But like parachuters lined up for the jump, go we must. But when? There is no big bang moment for Libor transition. A series of mini bangs maybe. In this report, we outline what they are
Executive summary
The 25th January 2021, in effect, was one key date. Since then all new Ibor-referenced derivatives glide towards fallback rates, with no going back.
The next key step will be fixing the spreads to help transition from existing Ibors to fallbacks. We don't know when exactly, but it's due. Then those fixed spreads could be used to transition loans.
The sterling market is ahead of the pace. By the end of 2021 fallbacks will be live. It's complicated in the US, but there is an extension to mid-2023 for legacy product. Fewer issues in the eurozone, but it's all linked anyhow, as most players have multicurrency exposures.
We also pan well beyond the big traditional Ibors. After all, this Ibor reform process is a global thing.
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26 February 2021
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