Industry news

LIBOR overview

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LIBOR and other interbank offered rates (IBORs) are used across Invesco and the industry as an interest rate index for financial products, a hedging tool, and a performance benchmark. 

December 31, 2021, marked the cessation date for all tenors of GBP LIBOR, JPY LIBOR, CHF LIBOR, and 1-week & 2-month tenors of USD LIBOR (except for the 1-month, 3-month, and 6-month tenors of GBP and JPY LIBOR, which will be published on a synthetic basis in 2022). The UK Financial Conduct Authority (FCA), which regulates LIBOR, has noted in a March 5, 2021 announcement that June, 30, 2023 is the cessation date for the other five tenors (overnight, 1- month, 3-month, 6-month, and 12-month) of USD LIBOR. Various other interbank offered rates (IBORs) are expected to be discontinued or reformed; however, in some cases, cessation dates have not been shared by regulators. Invesco, similar to the broader industry, is transitioning away from LIBOR to alternative risk-free rates according to regulator and working group defined timelines and guidance. Invesco continues to actively monitor and adjust the LIBOR transition strategy and timeline as necessary.

LIBOR replacements, ARRs, are fundamentally different than LIBOR. The specific qualities of ARRs differ based on jurisdiction, but ARRs are generally overnight risk-free interest rate benchmarks that are considered to be more representative and reliable than LIBOR. This is because these benchmarks are intended to be based on liquid markets, so they can be calculated by reference to actual transactions, as opposed to self-reported rates from panel banks, as is the case with LIBOR. Common ARRs include SOFR (Secured Overnight Index Average) in the US and SONIA (Reformed Sterling Overnight Index Average) in the UK. Products that reference ARRs are beginning to develop market liquidity and, as part of LIBOR transition, will impact various areas within Invesco.

Invesco has a dedicated LIBOR Transition Program to prepare for this transition and determine the overall Invesco impact of LIBOR discontinuance. The LIBOR Transition Program is consists of global personnel from a variety of impacted areas. The LIBOR Transition Program provides overall strategic direction to the organization for this significant industry change and will work closely with the applicable internal and external stakeholders to address readiness.

Invesco is committed to ensuring that LIBOR Transition occurs smoothly and with minimal disruption to our clients and stakeholders. If you have any questions regarding LIBOR, Invesco’s preparedness to make the transition to ARRs or any other related topics, please reach out to your primary Invesco representative or point of contact (i.e., relationship manager).