Keep calm and carry on using Libor.
Just as the world was put on notice that the end is nigh for the scandal-plagued London interbank offered rate, Janus Henderson Group Plc has started two new exchange-traded notes linked to the doomed benchmark.
A case of bad timing? Perhaps. Bankers around the globe are abuzz about which benchmark, or benchmarks, will replace Libor, which has been the subject of a string of manipulation prosecutions. Last month, Britain’s Financial Conduct Authority said it would no longer force banks to help set the rate as of the end of 2021.
But Janus, which launched the products last week, is sanguine in the face of such noise.
“The point of these products is to manage interest-rate risk, and for today the most liquid way to do that is with Libor,’’ said Nick Cherney, Janus’s head of exchange-traded products. The proposed changes for Libor “are very, very far out in the future.’’
Janus’s two notes — a Long LIBOR ETN and a Short LIBOR ETN sold under the VelocityShares brand — give investors a chance to bet on future Libor rates. Their indexes are calculated using the weighted average of the forward three-month dollar-Libor rate implied in the daily settlement of the next eight quarterly eurodollar futures. If the benchmark rate for the eurodollar contracts changes, the ETNs will adjust as well, according to Cherney.