As 2021 fast approaches, the burning question of what indices will replace LIBOR (London Interbank Offered Rate) comes to the forefront.

  • LIBOR scandals have caused the creation of alternative indices options. 
  • The impact to the Asset-Backed Securities (ABS) market could be significant as there are billions of dollars of residential mortgage loans in the U.S. that are tied to LIBOR.
  • Even in the event that a replacement is found by 2021, trustees will have to program different types of indices into payment calculations, as some deals span years and could span indices.

LIBOR is one of the primary benchmarks for short-term interest rates globally. Scandals have tarnished the index to the point that its dissolution is presumed by 2021. What will replace LIBOR? This is the question many are asking throughout the financial markets.

Asset Securitization Report brought together leading industry experts to discuss the different options and ideas being presented by various industry groups, including Wilmington Trust’s Alan Geraghty and Patrick Tadie. Read more to hear what the experts are saying about LIBOR’s future effect on ABS trustees.

Please see important disclosures at the end of the article.

This article reprint was published in the January 2018 issue of Asset Securitization Report . 

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