Libor’s US replacements: no one rate to rule them all

 Libor’s US replacements: no one rate to rule them all

A while back, FT Alphaville wrote about how sterling Libor’s demise was causing all sorts of headaches for the UK’s financial services industry. But the problems we’ve had on this side of the pond are nothing compared with the situation we’re seeing play out in the US right now.

There are many reasons why the attempts to ditch dollar Libor are proving more difficult on the other side of the Atlantic. One of them is that there are multiple candidates vying to replace the doomed benchmark.

The UK’s Libor transition is not without its issues. But what’s helped is that a consensus has formed around the Sterling Overnight Interbank Rate, or SONIA, as the agreed-upon alternative.

The situation in the US is more complex, with several benchmarks all competing for the title of Libor successor. In turn, this is leading many market players to put off replacing Libor in their financial contracts as well as slowing…

Read full article…www.ft.com