{"id":22415,"date":"2022-03-22T21:58:09","date_gmt":"2022-03-23T01:58:09","guid":{"rendered":"https:\/\/www.bloomberg.com\/company\/press\/life-after-libor-navigating-asias-new-rfr-bond-markets\/"},"modified":"2023-04-12T16:43:43","modified_gmt":"2023-04-12T20:43:43","slug":"life-after-libor-navigating-asias-new-rfr-bond-markets","status":"publish","type":"press","link":"https:\/\/www.bloomberg.com\/company\/press\/life-after-libor-navigating-asias-new-rfr-bond-markets\/","title":{"rendered":"Life After LIBOR: Navigating Asia’s New RFR Bond Markets"},"content":{"rendered":"
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Co-hosted webinar with ICMA revealed the LIBOR transition has so far been smooth, but the market is only at the beginning of its journey towards the adoption of risk-free rates<\/em><\/p>\n

 <\/p>\n

Bloomberg co-hosted its \u2018Life After LIBOR\u2019 Asia webinar with the International Capital Market Association (ICMA) to address the adoption of risk-free rates (RFRs) as the industry moves away from LIBOR. As the markets work towards ceasing the use of remaining USD LIBORs in 2023, market participants are exploring alternative benchmarks and new opportunities as they turn to RFRs.<\/p>\n

Senior representatives from ICMA and the Hong Kong Monetary Authority (HKMA) joined the webinar with experts from banks and corporates including Mitsubishi Corp., Bank of China (Hong Kong), HK CICC, the Asia-Pacific International Capital Market Association and Bloomberg to discuss the developments in RFR cash markets, current market dynamics and when Asian players should be accepting SOFR in the debt market.<\/p>\n

\u201cBloomberg has been at the forefront of the LIBOR transition since Andrew Bailey\u2019s speech in 2017. We\u2019ve maintained a global view on this process, recognizing each market\u2019s unique needs, and worked to solve the challenges faced by our clients. In addition, since the beginning, our focus has been on helping to familiarize the market with new products using RFR rates, and make the transition seamless for our market participants,\u201d said Pranav Thakkar, Global Fixed Income Business Manager at Bloomberg.<\/p>\n

RFR Products to Grow<\/strong><\/p>\n

Kicking off the discussion, Clara Chan, Executive Director (Monetary Management) at HKMA gave an overview of the LIBOR journey and the transition from LIBOR to RFRs along with fallback plans in place to deal with those yet to make the transition. \u201cIn the new world of \u201cno LIBOR\u201d, RFR financial products have great potential for growth. But as we all know, it will take time for the RFR market to evolve into a deep and liquid one,\u201d she said. \u201cI would like to thank Bloomberg which has been very supportive of our Floating Rate Notes (\u201cFRNs\u201d) issuance,\u201d she added.<\/p>\n

In discussions with Bloomberg on their data findings on LIBOR transition and RFRs in Asia, Katie Kelly, Senior Director at ICMA covered the adoption mechanisms of the new RFRs in bond markets and solutions to address legacy transactions beyond their cessation dates. \u201cActive transition remains important, and US dollar LIBOR under English law will remain a key focus,\u201d said Kelly.<\/p>\n

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Data source: Bloomberg L.P.<\/em><\/p>\n

Using Mitsubishi Corp.\u2019s adoption of TONA bonds as a case study on Asian players beginning to use RFR in the debt market, Hajime Horiuchi, Head of Treasury Team, Finance Department, Mitsubishi Corporation discussed the issuance in greater detail.<\/p>\n

Smooth Transition Despite Concerns<\/strong><\/p>\n

In the final session, a panel discussion, Annie Zhu, Deputy Head of Global Markets and Deputy Head of RMB workforce, Bank of China (Hong Kong); Yanbin Ji, Executive Director, Head of Interest Rate Trading, HK CICC; Mushtaq Kapasi, Chief Representative for the Asia-Pacific International Capital Market Association and Pranav Thakkar, Global Fixed Income Business Manager, Bloomberg shared their market views and observations on the use of RFR in the cash market.<\/p>\n

\u201cAs SOFR gradually picks up a higher proportion of the dollar market, the total volume of issuance is observed to continuously grow. Similarly, in the derivatives market, we are seeing a strong start to swap trading this year,\u201d said Zhu.<\/p>\n

Sharing his thoughts on how the IBOR transition has impacted the market, Ji said, \u201cThe transition from IBOR to SOFR has proceeded much more smoothly than the industry had anticipated. But there is this general unwillingness from the issuer to take on industry risks even though the markets have already priced in quite a bit of rate hikes for the next two years. The issuers have yet to come to the SOFR market, but that being said, we expect them to follow suit soon,\u201d he added.<\/p>\n

Echoing those thoughts, Kapasi said, \u201cAt ICMA, we definitely had some concerns about whether tough legacy bonds will be able to transition to the new risk-free rate bonds. But new issuances linked to LIBOR have effectively stopped and there is an awareness in the market that has increased significantly thanks to the efforts of the banks, Bloomberg, as well as regulators and other market participants. It\u2019s important to give credit to them for being very involved in facilitating an orderly transition, particularly in the UK and US.\u201d<\/p>\n

\u201cBloomberg has been the gold standard for the LIBOR transition and being able to work globally and work with colleagues and with our investor and bank community, we want to make sure we try to solve those challenges, help the market familiarize with the new products using RFR rates, and make the transition seamless for our market participants,\u201d Thakkar added.<\/p>\n

For further reading on how firms globally are navigating the final challenges of the LIBOR transition, please visit this 2022 industry survey<\/a> conducted by Bloomberg and the Professional Risk Managers\u2019 International Association (PRMIA). To watch a recording of the webinar, please contact your Bloomberg representative or click here<\/a>.<\/p>\n

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Media Contact<\/strong><\/p>\n

Robert Koh,\u00a0rkoh22@bloomberg.net<\/a>, +852-2977-2101<\/p>\n\n<\/div>\n\n\n<\/div>\n\n\n\t\t\n\t<\/div>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"

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