Investors Urge Efforts To Ensure Bonds Transition From LIBOR

Investment managers have said broader market participants must increase their efforts to ensure the LIBOR-linked bond transition deadline is met in six months’ time.

In a document released by the Investment Association (IA), the organisation and its members have emphasised the need to address the large number of outstanding LIBOR-linked bonds which have still not yet transitioned to a new rate, despite the rapidly approaching deadline.

Today we released a document emphasising the need to address the large number of outstanding LIBOR-linked bonds which have still not yet transitioned to a new rate, despite the rapidly approaching deadline.
For more info, see the full release here: https://t.co/EJ8pbKI00w

— The Investment Association (@InvAssoc) June 22, 2021

This comes after a letter earlier this year sent by the IA, detailing the broader market disruption that delaying this transition could cause. Since that letter, the FCA has confirmed the cessation dates for all panel bank LIBOR settings.

Galina Dimitrova, Director for Investments and Capital Markets at the Investment Association, said: “Our members have already been instrumental in encouraging the active transition away from LIBOR. However, there is clearly still more collective work to be done, and failure to do so has the potential to impact our industry and our clients much more widely than we might expect. 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 and its members have continuously demonstrated their commitment to a smooth LIBOR transition process and have taken numerous steps to help. To further aid issuers and sell-side representatives, the IA has now developed a Framework for Success – a common, high-level framework outlining key features the buy-side expects a LIBOR transition consent solicitation to have, to ensure that such proposals are acceptable to investment managers and to maximise the chance of them being successful. However, transition is not a process that can be driven by one part of the market. The IA is therefore calling on all market participants to actively engage amongst themselves in order to ensure effective collaboration and successful transition by the end of December.