In April 2021, Alabama followed New York’s lead and passed the LIBOR Discontinuance and Replacement Act of 2021, a bill aimed at addressing LIBOR cessation with respect to USD LIBOR contracts governed by Alabama law that include either insufficient, or no, LIBOR fallbacks.
Continue Reading Alabama Passes LIBOR Bill Substantively Identical to New York Bill

On 8 July 2021, Hong Kong Monetary Authority (HKMA) issued a circular to all authorised institutions (AIs) requesting them to give a further push to promote the corporate sector’s awareness of LIBOR transition.

HKMA requested each AI to (i) distribute a leaflet (enclosed with the circular) by 31 July 2021 to all of its corporate customers that have outstanding LIBOR-linked contracts with the AI; and (ii) send an email confirmation to HKMA after completing that exercise.Continue Reading HKMA directs all AIs to distribute LIBOR leaflet to corporate customers by 31 July 2021

On July 6, 2021, the Financial Stability Board released its latest Progress Report to the G20 on LIBOR Transition Issues. The report finds that, given the extent of risks associated with a failure to prepare adequately for the transition, the onus of action is on market participants. The FSB believes that the tools necessary to complete the transition are currently available, and have been for some time. Over the past several years, market participants have established mechanisms to use compounded risk-free rates (RFRs) not only in derivative markets, where use of RFRs was already common, but also in the cash markets. Firms now have certainty about the cessation timeline, and the fixing of spread adjustments by the International Swaps and Derivatives Association (ISDA) creates a clear economic link between LIBOR and selected RFRs, providing clarity for market participants to engage in discussions about active transition of LIBOR referencing contracts that expire after end-2021.
Continue Reading Financial Stability Board Releases Latest Progress Report on LIBOR Transition, Urging Action to Complete Transition by Year-End and Calling Out the Loan Markets

By now most, if not all, financial market participants know that the recommended alternative for the London InterBank Offered Rate (“LIBOR”) for U.S. Dollars is the Secured Overnight Funding Rate (“SOFR”). Many also are aware that, in addition to SOFR, five additional benchmark rates and/or spread adjustments have been proposed to replace LIBOR. These alternative benchmarks generally capture the cost of unsecured bank borrowing, which is the cost that LIBOR also reflects and which is a rate that is more relevant to the way many banks fund themselves than SOFR, which is a secured overnight rate based on transactions in U.S. Treasury securities.
Continue Reading Eeny, Meeny, Miny, Muse; Which LIBOR Alternative Shall I Choose?

Testimony at a virtual hearing on Thursday, April 15, 2021, of the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets of the US House Committee on Financial Services reinforced regulatory support for federal legislation to facilitate the transition from LIBOR.
Continue Reading Recent Congressional Hearing Indicates that Federal LIBOR Transition Assistance Law Increasingly Likely

On 31 March 2021 the Singapore Steering Committee for SOR and SIBOR Transition to SORA (“SC-STS”) published a report providing guidance on new industry timelines to cease issuance of SOR derivatives and SIBOR-linked financial products.  On the same day SC-STS and the Association of Banks in Singapore issued a joint press release (the “Press Release”) relating to the publication of the SC-STS report.
Continue Reading Singapore Reiterates the Need for Active Transition to SORA

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 March 9, 2021, the US Board of Governors of the Federal Reserve System (“FRB”) issued SR 21-7, Assessing Supervised Institutions’ Plans to Transition Away from the Use of the LIBOR, providing guidance to its bank examiners on how to assess the progress of supervised institutions in preparing to transition away from U.S. dollar (USD) LIBOR as a reference rate.[1] This guidance is intended to complement the Interagency Statement on LIBOR Transition that FRB issued in November 2020, which encouraged supervised firms to cease entering into new contracts that reference LIBOR as soon as practicable and noted that entering into such contracts after December 31, 2020, would create safety and soundness risks.
Continue Reading US FRB Issues Examiner Guidance for Assessing LIBOR Transition Progress

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