Fund managers are split on whether products currently referenced to LIBOR will be seamlessly transferred to SONIA when the old benchmark ceases to exist. Some, anticipating difficulties moving existing contracts to the new benchmark, have started selling LIBOR-referenced positions. The fund has also been buying a large amount of interest rate swaps tied to the London Interbank Offered Rate (LIBOR), which is used as an indicator for setting rates in other currencies.
Fund managers are split on whether products currently referenced to LIBOR will be seamlessly transferred to SONIA when the old benchmark ceases to exist. Some, anticipating difficulties moving existing contracts to the new benchmark, have started selling LIBOR-referenced positions. While the BoE’s working group’s report, published in July, issued a number of recommendations, concerns remain that these steps do not eliminate all the risks related to the transition from LIBOR.