Get a move on in scrapping Libor, UK asset managers tell issuers

LONDON: Britain’s asset managers have called on companies to “step up” efforts to agree a new benchmark for pricing bonds worth about 108 billion pounds ($147.38 billion), to avoid ending up in legal limbo when Libor is scrapped at the end of the year.

Not moving outstanding corporate bonds to an alternative reference interest rate risks “significant market disruption”, Galina Dimitrova, the Investment Association’s director of investments and capital markets, said in a letter to issuers.

The London Interbank Offered Rate will be replaced in Britain with a “risk-free” Sonia overnight rate compiled by the Bank of England. New bonds issues are already being priced off Sonia. Libor is being scrapped after banks were fined for trying to rig what was once dubbed the world’s most important number. Regulators are keen to avoid contracts being left in legal limbo if they have not been converted by Dec. 31.—Reuters