US Fed facility bought Libor bonds with ‘weak’ fallbacks

Industry surprise over purchase of floaters linked to doomed benchmark


With US dollar Libor set to be phased out by mid-2023, investors have been trying to wean themselves off floating rate bonds linked to the benchmark that mature after that deadline.

But that has proved difficult as even the Federal Reserve has shown, with a credit facility set up by the central bank to provide liquidity to the secondary bond market purchasing Libor-linked bonds with weak fallback language last year.

The secondary market corporate credit facility (SMCCF) was established in

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