While meme stocks, crypto and the ongoing inflation debate have received a lot of headlines this year, the ongoing work to replace the London Interbank Offering Rate (LIBOR), a benchmark interest rate, has continued largely behind the scenes. This effort, which began almost a decade ago, touches nearly every corner of the global capital markets. Teams of lawyers, bankers, back and middle office professionals, regulators and other market participants are working full-time around the globe on this massive undertaking.
The aggregate dollar value of exposures (estimated to be around $350 trillion1) is so large that the transition away from LIBOR could be a potential risk to global financial stability, according to regulators. With its many nuances and uncertainties, the end of LIBOR remains absent from many investors’ radars. However, we expect that to change as the transition approaches. This review intends to:
Provide background on why the transition is happening
Give key dates that investors should be aware of
Lay out the post-LIBOR landscape
Focus on how floating rate note investors may be impacted
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