At a meeting of the Benchmark Strategies Forum in March, the managing director of the International Swaps and Derivatives Association, Scott O’Malia, noted that while the Secured Overnight Funding Rate (Sofr) had changed trade conventions in the interdealer market for US dollar linear swaps, cross currency swaps and non-linear derivatives, it was still important to encourage participants in other market segments and geographies to move away from US dollar Libor.
Since then, volatility in capital markets, particularly the lack of activity in the leveraged loan market where issuers would normally review existing debt, has slowed progress.
Julien Rey, S&P Global
US financial institutions need to get their operations in order so that the operational legacy of Libor does not linger, says Yann Bloch, vice president product management Americas at NeoXam.
“That means making sure you have the latest technology in place to be able to easily transfer thousands of Libor-linked contracts automatically to the new risk-free rate,” he said.
However, there is no one-size-fits-all approach to data or technical functionality for the transition, says Tal Reback, director at KKR responsible for leading the company’s global Libor transition.