In the Wall Street Journal, Amol Dhargalkar explains how looming LIBOR deadline will affect U.S. corporate treasury teams
- December 6, 2021
Managing Partner, Board Member
Global Head of Corporates
Kennett Square, PA
U.S. companies will no longer be able to borrow against LIBOR starting on January 1, 2022. In the Wall Street Journal, Amol Dhargalkar explains what this means for corporate treasury teams.
The Wall Street Journal
Most companies will have to update their systems to handle compounded-interest calculations given that those weren’t needed on a frequent basis prior to SOFR, said Amol Dhargalkar, managing partner and global head of corporates at Chatham Financial Corp., a financial-risk adviser.
After the end of 2021, banks will not longer be able to issue new loans or financial contracts pinned to LIBOR. As U.S. companies plan to transition their legacy contracts to alternative reference rates and begin to borrow with new benchmark rates, their systems will have to handle new calculations. Most companies will have to update their systems to handle compounded-interest calculations given that those weren’t needed on a frequent basis prior to SOFR, said Amol Dhargalkar, managing partner and global head of corporates at Chatham Financial Corp., a financial-risk adviser. These upgrades often require additional time and money for corporate treasury teams, he said.
Our expertise for corporates
Chatham provides the knowledge and expertise needed to manage the financial risk associated with interest rate, commodity, and foreign exchange volatility. We develop and implement hedging strategies for hundreds of public companies annually, based on deep and productive banking relationships, giving us market data and insights to enable you to secure the best pricing and terms. Our goal is to empower you to strengthen your financial position and support your company’s financial objectives.
With expertise across hedge accounting, regulatory compliance, valuations, and hedging transactions, we can support all aspects of financial risk management. Our ChathamDirect platform provides convenient workflow, robust analytics, and comprehensive accounting methodologies, supported by our unmatched commitment to client service. This unique combination of strategy, operations, and technology will empower you to run a best-in-class hedging program.
Our featured insights
2022 treasury trends and market dynamics
Inflation, changing labor market dynamics, and other key factors will impact both strategic and operational decisions treasury teams make to manage their financial risks.
Amol Dhargalkar spoke with CFO Dive on hedging as inflation rises
CFO Dive spoke with Amol Dhargalkar about how companies can still devise a hedging strategy to protect their businesses from price volatility as inflation rises.
Amanda Breslin in the Wall Street Journal on corporate borrowing and credit-sensitive alternative rates to LIBOR
The Wall Street Journal spoke to Amanda Breslin about the rise of credit-sensitive alternative rates like BSBY and AMERIBOR as companies find that SOFR may not cover all of their needs for longer-term rates.
Amol Dhargalkar discusses how corporates can prepare for LIBOR transition with Axios
After Chatham surveyed corporate treasurers and found 39% of respondents were not sure how to prepare for LIBOR transition, Amol Dhargalkar discusses how corporates can prepare with Axios.
Chatham's Brittany Jervis explains to NeuGroup how the FASB offers corporates operational relief in the LIBOR transition
The Financial Accounting Standards Board (FASB) started 2021 by clarifying accounting guidance aimed at facilitating the transition of corporate floating-rate transactions away from the LIBOR reference rate. Brittany Jervis spoke with NeuGroup Insights about how the FASB's ASU 2021-01 and the...
LIBOR transition readiness checklist for corporates
This proprietary checklist is informed by Chatham Financial's team of hedging, regulatory, and accounting advisors with visibility across 100+ banks and 3,000+ clients. By taking these 12 key actions, your treasury and accounting teams can confidently prepare for the transition from LIBOR to SOFR.
LIBOR transition: 3 key focus areas may require immediate actions from corporates
Two key events in the transition from LIBOR occurred during October and could affect your organization’s existing derivatives and debt portfolios. This article outlines the accounting and operational impacts of these milestones as well as immediate actions that you should consider taking.
U.S. interest rates surge on Fed’s hawkish stance, omicron weighs on recovery
Minutes from last week’s Fed meeting revealed an increased chance of three rate hikes in 2022, driving interest rates to levels not seen since April 2020. Major commodity inputs remain significantly elevated while USD’s strengthening trend is muted to start the new year. Weak job creation...