Time is running out for market participants to prepare for when Libor ceases to be published by the end of 2021—a reality still on track despite the far-reaching disruptions caused by the Covid-19 pandemic. With hundreds of trillions of dollars’ worth of Libor-based contracts to be referenced to a wide range of new risk-free rates (RFRs), the transition will require the full attention of all organizations to avoid disruptions with the help of the right data and tools.
Financial and non-financial companies need to find ways to avoid operational, legal, accounting and trading disturbances, and transition to alternative reference rates and benchmarks to value the assets correctly in a time when their hands are already full responding to the pandemic and market volatility.
Data will remain at the heart of navigating the changes. Newly available data and new RFRs will drive new curves, pricing and content sets. With vendors and tools in mind, market participants must understand from where they are sourcing Libor rates, how to ultimately replace Libor with an alternative rate and from whom they will get that rate.
This report provides a guide to figuring out what is at stake with Libor and other interbank offered rates (Ibors). It addresses the challenges and risks, the development of alternative data or reference rates, and begins the process of replacing Libor well ahead of the expected end-2021 deadline.