Some innovations can turn out to be too stressful in the world of finance. Most market participants prefer to use conventional methods, trying to avoid risks. That is why replacing the Libor rate seems to be a bad idea. 

According to surveys, most big companies do not intend to abandon the London Interbank Offered Rate despite a planned switch-over to a new short-term lending benchmark rate. Less than 50% of 177 surveyed companies confirmed their readiness to stop using the Libor rate. The transition to a new short-term rate is to be completed by the end of 2021. 

The major financial regulators require banks to get prepared for this white-knuckle transition by 2022. Being the benchmark in most transactions around the world, the Libor rate is to be replaced due to a manipulation scandal. 

In April 2018, the Federal Reserve Bank of New York unveiled three indicative rates than can be used instead of Libor. One of these rates is the secured overnight financing rate, or SOFR. It is calculated based on the overnight repo operations on the US debt market. 

According to experts, the transition from the Libor rate proceeds very slowly. The value of sell transactions on the floating-rate debt securities linked to SOFR has amounted to just $240 billion since July 2018. However, this sum is a drop in the ocean that does not change the overall situation, analysts emphasized.

The survey conducted by Accenture showed that 84% of the companies had started preparing for a replacement for Libor, while only 47% said they would be able to complete the transition in time. At the same time, 15% of respondents said their legal departments were ready for the introduction of the SOFR rate. 14% of the surveyed companies fear that the changeover would negatively affect their businesses.