The era of risk-free rates has begun and the era of interbank offered rates (and this blog) is ending.

The key LIBOR rates, other than USD LIBOR, are long retired. USD LIBOR continues to exist only as a synthetic rate to aid the transition of tough legacy contracts, and that too will end in a

As we await the Federal Reserve Board to finalize the LIBOR transition regulations set forth in its notice of proposed rulemaking – Regulation Implementing the Adjustable Interest Rate (LIBOR) Act,[1] we are grateful[2] that on 23 November 2022 the Financial Conduct Authority (“FCA”) published Consultation Paper CP22/21: Consultation on ‘synthetic’ US dollar LIBOR and feedback to CP22/11 (“CP22/21”), in which it (a) proposes to require continued publication, under an unrepresentative “synthetic” methodology, of 1-, 3-, and 6-month USD LIBOR until the end of September 2024 and (b) announced that 3-month synthetic GBP LIBOR will continue to be published until the end of March 2024, after which each will cease permanently. Comments are requested on or prior to 6 January 2023.Continue Reading Thankful for Increasing Clarity on LIBOR’s Final Fate

We are in the final days of LIBOR as we know it. Partner, Ash McDermott, discusses the recent advances in the export finance community toward LIBOR transition, with a specific focus on the question of whether export credit agencies should publish general “umbrella” guidance that would permit export loan documentation to transition to a recommended

The interest rate benchmark LIBOR is being wound down and the UK Financial Conduct Authority has announced how it will use its powers under the UK Benchmarks Regulation to aid the orderly wind-down of sterling- and yen-linked “tough legacy contracts.”
Continue Reading FCA confirms rules for legacy use of synthetic LIBOR rates and no new use of US dollar LIBOR

On 29 September 2021 the UK Financial Conduct Authority (“FCA”) published Consultation Paper CP21-29: Proposed decisions on the use of LIBOR (Articles 23C and 21A BMR), in which it set out its plans for the temporary publication of ‘synthetic’ versions of LIBOR for a narrow range of outstanding sterling and yen contracts that cannot

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

On 29 April 2021, the Financial Services Act 2021 (“the Act”) received Royal Assent and became law in the United Kingdom. The Act introduced reforms to a number of key UK financial services frameworks, which also represent the first major changes to the UK regulatory landscape following the UK’s departure from the European Union on 31 December 2020. One area of reform includes amendments to the UK Benchmarks Regulation (“UK BMR”).
Continue Reading Legislative solutions to tough legacy contracts are passed into UK law

What does the 5 March 2021 announcement by the UK Financial Conduct Authority on the future cessation or loss of representativeness of all 35 LIBOR benchmarks mean for the over 13,500 adherents to the ISDA 2020 IBOR Fallbacks Protocol and its fallbacks supplement? What does it mean for the counterparties using bilateral amendment agreements