The move comes because of the possibility for
USD Libor to be discontinued.
Doha Bank said the facility will be used for general working capital purposes, and carries a margin of 100 basis points per annum over
USD Libor and has a bullet repayment at the end of the two-year tenor (with a further one-year extension option exercisable at the discretion of lenders).
The Attorneys General allege that UBS misrepresented the integrity of the LIBOR benchmark by "concealing, misrepresenting, and failing to disclose that UBS at times made
USD LIBOR submissions to avoid negative publicity and protect the reputation of the bank, and that UBS made Yen LIBOR submissions to benefit its derivative trading positions." [Reference Link]:[https://ag.ny.gov/press-release/ag-underwood-announces-68-million-multistate-settlement-ubs-ag-ubs-artificially]
Treasury repurchase market and an alternative reference rate to
USD LIBOR.
According to sources, the interest rate on the domestic loan tranche reaches 0.75% above the lending and discount rate of the Central Bank of Egypt, while the US dollar tranche will bear an interest of 3.75% above the
USD LIBOR interest rate.
FGB will be paying 70 bps per annum above
USD LIBOR and has a bullet repayment at the end of the three year tenor.
According to Hou and Skeie, "It is striking to note that even the
USD LIBOR, the most liquid of the 10 LIBOR currencies, suffers from this lack of market depth, as more than half of the fifteen quoted maturities have reported little to no trading activity in recent years."
The interest rate comprises a six-month
USD LIBOR + variable margin.
Summary: Short-term interbank rates up nearly 30 bps in 6 months; Rise in
USD Libor, geopolitics appear to be factor Bank liquidity still high, loan/deposit ratio moderate; But bank lending jump could pressure rates late this year; Official rate hike probably still distant
According to the amended terms, the facility will bear interest at the rate of the three-months,
USD LIBOR and 4.5 percent.
The three-year USD0.2bn floating rate notes will bear an annual interest rate of three-month
USD LIBOR plus 4.00% and will be due in June 2014.
However, the most recent volatility continues to be derived from the historically lower US interest rates (0.28%, 3-month
USD LIBOR), which have lured investors to borrow in USD and invest proceeds in higher-yielding assets.