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Moody’s Warns of Credit Risks From Struggle to Replace Libor

June 30, 2020, 3:52 PM

Moody’s Investors Service has warned of increased credit risks within the global financial system due to slow progress in replacing Libor, the scandal-hit benchmark that underpins trillions of dollars in bonds, loans and derivatives.

The ratings company said some current contracts using the London Interbank Offered Rate may not even find a replacement, adding to the potential for litigation between counterparties. Tight liquidity in alternatives to Libor and a need for clarity on market standards is adding to the problem, before a withdrawal scheduled for the end of 2021.

“The likelihood of parties turning to the courts to resolve transition-related ...

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