• BCMstrategy, Inc.

Your LIBOR Transition Cheat Sheet

It is no secret that the LIBOR transition creates far more risks and challenges than merely re-papering legacy contracts. But companies facing the transition end up focusing first on the mechanical operation of replacing one pricing term for another because technically this is easier to implement than the other challenges.

A pragmatic but single-focus LIBOR transition is a mistake.

Replacing a single pricing benchmark with multiple benchmarks generated at different times of the day in different locations requires a massive risk management realignment for cross-border portfolio exposures.

Attempting to write new contracts and transition legacy contracts without knowing the full term structure of how these benchmarks will operate amid stress....say, perhaps, pandemic-related stress, requires additional and more thoughtful approaches to approximating risk exposures.

So herewith, please find your LIBOR cheate sheet to help you navigate the multi-dimensional challenge.

We will be discussing these and other major transition issues at our webinar on Wednesday, July 29 at 10 am ET/1500 GMT. Register for the webinar HERE.


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