IBORlinked

IBORlinked, also known as the IBOR Alternative Reference Rates, is a term used to describe a set of alternative benchmark interest rates that have been developed to replace the London Interbank Offered Rate (LIBOR) after the expiration of the latter in 2021.

The LIBOR was a widely used reference rate for short-term interest rates, which was used as a benchmark for a vast array of financial products, including mortgages, credit cards, and derivatives. However, it was declared unconstitutional by a number of national competition authorities due to potential manipulation.

IBORLinked is a term that has emerged to describe the potential relationships between LIBOR and new reference rates, such as the Secured Overnight Financing Rate (SOFR) in the United States, the Sterling Risk-Free Reference Rate (RFR) in the United Kingdom, and the Euro Short-Term Rate (EURIBOR) in the eurozone. These alternative rates are being developed to support the transition away from LIBOR and are expected to serve as more robust and reliable sources of pricing information.

The move to IBORLinked is a consequence of the widespread perception that LIBOR is no longer a reliable benchmark due to years of manipulation by major banks. The main aim is to ensure the continued smooth functioning of financial markets and to prevent potential disruptions caused by changes to benchmark rates.

By referencing IBORLinked, market participants can reduce potential risks and uncertainties associated with the change to rate reforms. The term is being increasingly used to refer to the new cosmic reality post-LIBOR naturally emanating individual rates positioned against former parity.