LIBOR (and other IBORs) Transition
Important Information: The following explanation of the LIBOR (and other IBORs) Transition is provided for information purposes only. This information is not advice or a recommendation for any particular course of action, and no decisions should be made in respect of this information. No representations are made as to the information’s completeness, accuracy or suitability for any purpose. Recipients should take professional advice before taking any action.
Preparing for Transition from IBORs to Risk Free Rates
Interest rate benchmarks based on interbank offered rates (“IBORs”), the interest rates at which banks lend to and borrow from one another in the interbank market, are in the process of being reformed. There are a number of IBORs that are widely used in the financial markets including the London Interbank Offered Rate (“LIBOR”).
Public authorities, in both the UK and internationally, have been clear that LIBOR is expected to cease to exist after the end of 2021. Working groups have been set up in many different jurisdictions and alternative risk-free rates (RFRs) have been selected for all major currencies. RFRs are (near) risk-free rates calculated based on market transactions under the supervision of the relevant national regulator.