DealVector Addresses Libor Issue

DealVector has added a feature to its electronic messaging service: an online forum where structured-product issuers and investors can discuss changes to Libor. Libor Hub, which went live May 8 at liborhub.com, is open to market participants who want to share ideas about replacing Libor as a key benchmark following a move by the U.K. Financial Conduct Authority last year to release banks from their obligation to report the rates, effective 2021.

Like DealVector’s main messaging service, which has about 2,500 users, participation in Libor Hub is free. But the Sausalito, Calif., company is developing a paid service through which issuers would be able to reach out to investors about amending deal documents to reflect changes to Libor.

To address concerns about Libor, trade groups including the Structured Finance Industry Group and Loan Syndications and Trading Association have formed committee to propose alternative ways of pricing bonds. Intercontinental Exchange, meanwhile, says it will continue publishing Libor.

But concerns remain about how to amend documents for outstanding deals to reflect possible changes. As for new deals, attorneys have begun adding language that would allow the substitution of new benchmarks if Libor disappears.

“If you want to transition away from Libor, how do you do it?” DealVector co-founder Dave Jefferds asked. “A lot of the deal language differs from deal to deal. There are just a lot of issues and many different solutions.”

Jefferds is serving as DealVector’s interim chief executive following the recent departure of Mike Manning.

Published in the Asset-Backed Alert May 11, 2018 edition.