In a flurry of legislative activity on 24 March 2021, the New York State Senate and Assembly passed bills that, once signed by Governor Cuomo, will facilitate the transition from LIBOR of “tough legacy” contracts that are governed by New York law and that do not include adequate interest rate fallback provisions that contemplate a

On 5 March 2021, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, released the much anticipated feedback statement (“Cessation Statement”) reporting the results of its 4 December 2020 Consultation on Potential Cessation. IBA consulted on the issue of LIBOR publication cessation because “a majority of LIBOR panel banks had communicated to IBA that they would not be willing to continue contributing to the relevant LIBOR settings after [the proposed cessation] dates.” Pursuant to the Cessation Statement, IBA intends to cease publication of (i) all GBP, EUR, CHF and JPY LIBOR settings, and the 1 Week and 2 Month USD LIBOR settings immediately following the LIBOR publication on 31 December 2021, and (ii) the Overnight and 1, 3, 6 and 12 Month USD LIBOR settings immediately following the LIBOR publication on 30 June 2023, subject to any rights of the UK Financial Conduct Authority (“FCA”), the regulatory supervisor of IBA, to compel IBA to continue publication using a changed methodology. Individual non-confidential responses to the consultation, of the 55 responses received, can be viewed on the IBA website.

Continue Reading IBA Sets LIBOR Publication Cessation Dates and Triggers a LIBOR Transition Event

With 2021 in full swing, we have received a number of queries from our clients trying to sort out the competing recommended best practice milestones for preparing for the transition from LIBOR to alternative reference rates. To assist in this analysis, we have prepared a matrix—Summary of LIBOR Transition Recommendations for Key LIBOR Currencies—setting forth

On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of U.S. Dollar LIBOR (“USD LIBOR”) and other IBORs, lowered the pressure with respect to the upcoming cessation of USD LIBOR. IBA announced that, following a consultation in December and January, (i) it intends to cease publication of 1-week and 2-month USD LIBOR at the

During an economic downtown, LIBOR (and the interest rate on a LIBOR-priced loan) would likely increase.  Because SOFR is a rate based on transactions secured by U.S. Treasury obligations, it’s possible that during an economic downtown SOFR (and the interest rate on a SOFR-priced loan) would not increase and would in fact decline.  Thus, in times of economic stress, a bank’s income from its SOFR-priced loans would decline, while its funding costs would increase.

Continue Reading A Credit-Sensitive Supplement to SOFR: Borrowers’ Objections

The Benchmark Regulation (“BMR”) came into force in 2016 and applies since 1 January 2018. It aims to regulate benchmarks, including interest rate benchmarks such as London Interbank Offered Rate (“LIBOR”), used in the EU in order to make such benchmarks more reliable. For this purpose, the Benchmark Regulation introduced licensing and registration requirements but also obligations for users of benchmarks to deal with, and provide for plans in case of, interruptions or cessations of benchmarks. The BMR, however, does not give supervising authorities the right to directly amend financial instruments or contracts if the parties to it are unable to replace a benchmark for whatever reason. So any of these plans are subject to civil law requirements and restrictions applicable to a financial instrument or contract under its governing law.

Continue Reading Proposal for a Governmental IBOR Transition in the European Union