The Switzerland-based Financial Stability Board is warning that despite COVID-19 disruptions, market participants should keep working to remove remaining dependencies on the London Interbank Offered Rate (LIBOR) by the end of next year.
Although some transition plans are “likely to be temporarily disrupted,” other preparations for a post-LIBOR world can continue. Specifically, firms should shift to other benchmarks, the statement advises.
Fitch Ratings recently noted that such preparations generally are continuing, despite the pandemic. Fitch added that although meeting the end of 2021 deadline can be accomplished, major hurdles remain — especially in the United States.
For example, although some U.S. banks have switched hybrid originations from LIBOR to the Constant Maturity Treasury Index, many smaller and regional banks still appear reluctant to switch from LIBOR-linked issuance, Fitch noted.
