In the Wall Street Journal, Amol Dhargalkar explains how looming LIBOR deadline will affect U.S. 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.
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