Hedge Trackers Comments on the End of LIBOR

Bloomberg Tax – “LIBOR’S Looming End Leaves Hedgers, Lenders in a Bind”
Nicola M. White, Reporter

“This is really so pervasive, it’s going to affect literally every company out there,’ said Ernie de Lachica, senior director at BDO USA LLP. Any business that has a loan likely has an interest rate tied to LIBOR, and banks making loans are going to have to figure out how to adjust the contracts once the rate goes away.”

Hedge Trackers Senior Director of Client Services, Ruth Hardie,

“There is no way to leave LIBOR at this time and treasurers need to get themselves ready and identify how this transition will affect them. As of now, treasurers are looking at the obvious places such as loans and derivatives, but they need keep in mind that LIBOR can also be referenced in their leases, AR, and transfer pricing. Overall, it’s time to start planning alternatives.”

Hedge Trackers Director of Quantitative Analytics, Farah Lotia,

“Looking more at the corporate side, less on the financial market side, corporates have a false sense that they will have time to make the LIBOR switch since it is having a slow transition like OIS. What they don’t realize is that once the banks are no longer required to support the publishing of LIBOR rates, I suspect the LIBOR market will become illiquid much faster than people are anticipating.”