LONDON (Reuters) – Banks and the businesses they lend to are putting the brakes on preparations for the end of Libor, industry sources say, because they are too busy grappling with fallout from the coronavirus to deal with the complexities of interest rate benchmarks.
Global regulators have said they want to stick to the current end-2021 deadline for scrapping Libor, which is embedded in up to $340 trillion worth of financial contracts worldwide. Authorities decided to phase out the benchmark after finding some traders had manipulated it for profit.
But this timetable has put them at odds with banks which have diverted staff from Libor project teams because of the coronavirus and pared outreach initiatives to clients who were already struggling with the transition before the outbreak.
While derivatives markets are adapting to alternative benchmark rates efficiently, companies with Libor-linked debt are finding the changes more expensive and cumbersome.