Managers in the U.K. called on corporations that issue bonds in pound sterling to expedite the transition away from LIBOR, which will be phased out Dec. 31.
About £108 billion ($147.7 billion) of bonds linked to the London interbank offered rate have yet to transition to a new benchmark rate, the Investment Association said in a letter Wednesday to FTSE 350 companies.
Companies should immediately transition the benchmark rate for their bonds from LIBOR to one of the recommended risk-free rates, the letter said. One example of a risk-free rate is the sterling overnight interbank average rate, known as SONIA.
LIBOR will no longer be used after Dec. 31.
"Time is running out for companies to transition their LIBOR-linked bonds," said Galina Dimitrova, director for investments and capital markets at the Investment Association, in a news release accompanying the letter. "Companies that have yet to do so must now take urgent action to ensure their bonds are LIBOR free by the end of 2021."
Edwin Schooling Latter, director of markets and wholesale policy at the U.K.'s Financial Conduct Authority, added in the news release: "The FCA welcomes the IA's initiative to help issuers of LIBOR securities reach out to IA members who hold their bonds to agree (to) conversion through consent solicitation."
Conversion from LIBOR to risk-free rates such as SONIA following industry recommendations can enable both bond issuers and holders to avoid the uncertainty they will face upon LIBOR's phaseout, Mr. Latter added.
