Structured products are lost in translation post-Libor

Benchmark shift would “fundamentally transform” popular rates structures, users fear

Mistranslations can be costly. When HSBC rolled out its “Assume nothing” branding campaign globally in 2009, the motto awkwardly translated as “Do nothing” in a number of territories. The doomed tagline was soon scrapped in a fresh $10 million marketing blitz.

Similarly, a change of benchmark is threatening to transform a string of popular structured products into different investments. The switch from Libor to risk-free rates may even cause some structures to break down entirely.

“Libor

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