Navigating the LIBOR Transition Brochure

Financial Services

December 5, 2019

City Lights

The London Interbank Offered Rate (LIBOR) is embedded in an estimated $400 trillion of financial contracts, and panel banks will no longer be compelled by the UK Financial Conduct Authority (FCA) to submit rates to publish LIBOR beyond 2021.

The US Securities and Exchange Commission (SEC) and the FCA have advised public companies (and regulated entities) affected by LIBOR to assess their risk exposure, quantify the financial impact, develop remediation plans, and communicate material information to stakeholders.

The LIBOR transition will impact counterparties to each LIBOR-based contract, creating winners and losers, and heighten uncertainty over the interim period.

FTI Consulting has established a LIBOR Transition Task Force to work with clients, industry groups, law firms, and policy makers and to advise affected stakeholders on the most challenging issues related to the shift in reference rates, including:

  • Identifying and inventorying firm wide LIBOR exposure – FTI Consulting’s e-discovery experts utilize a structured analytics engine that identifies and analyzes a company’s relevant contract universe. Working alongside legal counsel, FTI Consulting’s AI-driven solutions assess the current state of fallback provisions and prioritize contracts that require remediation or renegotiation.
  • Real-time, dynamic modeling of the multi-faceted quantitative challenges of the LIBOR transition – FTI Consulting has developed Quantum, an adaptable and scalable proprietary analytics and risk-management system that delivers valuations, advanced risk reporting and sophisticated stress-testing tools. Combined with world-class quantitative and trading experts, FTI Consulting is uniquely positioned to support clients through the rapidly evolving quantitative challenges of the LIBOR transition.
  • Developing enterprise-level communications – Companies must ensure that their investors, clients, and employees are informed and prepared for questions about the repercussions, including what is happening, how it impacts them and what is being done to protect clients and investors. FTI Consulting’s communications experts bring their deep financial industry expertise to help clients prepare for, anticipate, and respond to key stakeholders affected by the LIBOR transition.

The transition away from LIBOR is a complex and sweeping market event that is continually evolving as new developments arise from industry working groups and regulators. Firms must proactively identify exposures to LIBOR, as well as evaluate and quantify the impact of cessation. FTI Consulting’s breadth of expertise enables us to provide dynamic, customized end-to-end solutions for clients facing this transition.

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