Bond managers take action to tackle risks from scandal-hit LIBOR phase-out

Will no longer be published from 2021

Asset managers are facing difficult decisions on how to address concerns arising from the replacement of interest rate benchmark LIBOR in 2021, with some taking the option to offload certain holdings as quickly as possible to avoid any fallout from the changes.

The London Interbank Offered Rate (LIBOR) is currently the world's most widely-used reference rate, providing a benchmark for approximately $350trn worth of financial products, according to legal firm Ashurst. FCA bans Libor rigger Hayes However, a big shake-up is looming as bank traders were found to have been manipulating LIBOR in the wake of the financial crisis, leading to around $9bn in fines and several convictions, and ultimately the decision by regulators to phase out LIBOR altogether by 2021. In the UK, the working replacement is SONIA; a near risk-free alternative derivat...