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THBFIX-linked financial products no longer issued from July next year: BOT
EconNov 18. 2020
By The Nation
From July 2021, all financial institutions will stop offering new loans and debt securities which reference the Thai Baht Interest Rate Fixing (THBFIX), the Bank of Thailand (BOT) announced on Tuesday. The move was spurred by the scheduled cessation on December 31, 2021, of the London Interbank Offered Rate (LIBOR), which is used to calculate the THBFIX.
The BOT and a committee on banks’ preparedness for LIBOR cessation agreed that the move was necessary in order to limit the amount of THBFIX exposure, thereby reducing risks associated with the LIBOR transition.
New financial products can switch to the new interest rate benchmark, the Thai Overnight Repurchase Rate (THOR) which the committee and BOT have developed as an alternative.
The BOT said after THBFIX is discontinued, it will publish a Fallback Rate (THBFIX) to be used for THBFIX legacy contracts until end-2024. It should become obsolete as THOR-referencing products should be widely available in the market by then.
Market participants can find additional details on the preparation for LIBOR cessation at https://www.bot.or.th.