The end of Libor – which has been looming over the financial markets for years – is now imminent.
The UK’s Financial Conduct Authority (FCA) has confirmed that sterling, euro, Swiss franc and Japanese yen Libor will cease after December 31, as will one-week and two-month US dollar Libor.
All other US dollar settings will end after June 30, 2023.
Despite this, even at such a late stage, the market is still developing a universal approach to address the commercial and documentation aspects of conversion, notably the implied trading spread between Libor and Sonia – the sterling overnight index average.
Tim Nicholson, KPMG partner, debt advisory, says that with so many competing pressures on businesses at present and without any apparent first-mover advantage, in his experience most borrowers are taking a wait-and-see approach until precedent has become more established.
This relaxed attitude was reflected in a member survey published by the Loan Market Association in...
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