Low levels of engagement from commercial borrowers in IBOR transition initiatives places the corporate sector at risk of alternative rates presenting them with significant hedging and operational challenges. Cash and derivative markets are working on different approaches for the migration from IBOR, but rather than allowing the market to evolve, end users should focus on the practical implication of the choices, said Chatham Financial’s Director of Global Compliance and Regulation Eric Juzenas. “While there is a lot of discussion about how banks can better manage their exposure to these products, it remains unclear whether they will be able to do so without compromising their ability to provide services or
Low levels of engagement from commercial borrowers in IBOR transition initiatives places the corporate sector at risk of alternative rates presenting them with significant hedging and operational challenges. Cash and derivative markets are working on different approaches for the migration from IBOR, but rather than allowing the market to evolve, end users should focus on the practical implication of the choices, said Chatham Financial’s Director of Global Compliance and Regulation Eric Juzenas. One concern is that the fallback trigger descriptions could differ between loans and the products used to hedge the borrower's risk, resulting in misaligned hedges.