Welcome to the latest issue of Mayer Brown’s IBOR Transition Digest—a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates. As attention to IBORtransition accelerates and becomes more focused, it is critical to have access to comprehensive and timely resources about the market.
For additional resources and an introduction to our global cross-practice IBOR Transition Task Force, please visit Mayer Brown’s IBOR Transition portal.
IBOR Transition Readiness Survey
Mayer Brown IBOR portal, Introduced 17 November 2020
Our latest IBOR transition resource, an IBOR transition readiness survey jointly developed and presented with Morae global, helps organizations address the complex and imminent issue of IBOR transition, with follow up guidance and checklists.
Eye on IBOR Transition from a Structured Finance Perspective
Eye on IBOR Transition Blog, 9 December 2020
In the Winter 2020 issue of our Structured Finance Bulletin, we explore a number of recent core global IBOR transition developments affecting structured finance products.
A Brief Reprieve on LIBOR Cessation
Legal Update, 7 December 2020
On November 30, 2020, ICE Benchmark Administration, the administrator of U.S. Dollar LIBOR and other IBORs, lowered the pressure with respect to the upcoming cessation of USD LIBOR with its announcement of a consultation on its intent to cease publishing the more frequently used tenors of USD LIBOR after June 30, 2023. We analyze the effect of these well-received statements on the FRN, syndicated loan and CLO markets.
Road to Risk-Free Rates in Japan
Eye on IBOR Transition Blog, 7 December 2020
Japan, like other countries that rely on LIBOR as the preferred reference rate, has had to consider alternatives for its reference rate that uses USD LIBOR as a component. In 2019, the Cross Industry Committee on Japanese Yen Interest Rate Benchmarks, together with the Bank of Japan, held a public consultation on the choice of alternative benchmarks to JPY LIBOR, the results of which revealed an industry preference for two alternatives: the Tokyo Interbank Offered Rate ("TIBOR") and the Tokyo Overnight Average Rate.
IBOR Transition – Hong Kong Regulatory Guidance
Eye on IBOR Transition Blog, 3 December 2020
The reform of the benchmark interest rate has significant implications for implications for Authorised Institutions (“AIs”) in Hong Kong. The Hong Kong Monetary Authority has issued a number of Circulars to AIs regarding benchmark rate reforms since March 2019, requiring AIs to get ready for the transition. Similar to the regulators in other jurisdictions, HKMA mainly focuses on bank conduct and treat-customer-fairly principles, and readiness of systems and operations ahead of the transition.
United States – General
Guide on the Endgame for USD LIBOR
Alternative Reference Rates Committee, 4 December 2020
Explaining what market participants need to know after the November 30 announcements by U.S. and UK regulators and LIBOR’s administrator regarding the end of U.S. Dollar LIBOR.
United Kingdom – General
ICE LIBOR Consultation on Potential Cessation
ICE Benchmark Administration, 4 December 2020
As announced on 18 and 30 November, ICE Benchmark Administration has published a consultation on its intention to cease publication of (a) all tenors of GBP, EUR, CHF, and JPY LIBOR, as well as 1-week and 2-month USD LIBOR after 31 December 2021 and (b) all remaining tenors of USD LIBOR after June 30, 2023. Comments are due by January 25, 2021.
Asia and Pacific Rim – Syndicated and Bilateral Loans
Example of the spread adjustment methodology using the "historical median approach over a 5-year lookback period" applicable to TIBOR as the replacement benchmark for loans
Bank of Japan, 30 November 2020
Prepared by the Sub-Group on Loans and presented at the November 5 working group meeting.
Asia and Pacific Rim – General
Response to Feedback on SIBOR Reform and the Future Landscape for SGD Interest Rate Benchmarks Consultation
The Association of Banks in Singapore, Singapore Foreign Exchange Market Committee, and Steering Committee for SOR & SIBOR Transition to SORA, 11 December 2020
Setting forth milestones for the discontinuance of SIBOR based on the 74 responses to the July 2020 consultation, which had recommended the discontinuation of SIBOR in three to four years. The joint industry response noted the respondents’ broad support for the proposed SIBOR discontinuation and timelines, including the proposal to discontinue 6-month SIBOR before the other tenors, given its low market usage and a lack of transactions to underpin the publication of this benchmark. Responses to the consultation showed a strong consensus among the respondents for a shift towards a SORA-centered SGD interest rate market, which would allow for more transparent market pricing for borrowers, and more effective interest rate risk management for lenders.
Global – General
The Path Forward for LIBOR - Webcast and related full transcript
International Swaps and Derivatives Association, 4 December 2020
A webcast answering a series of questions presented by market participants regarding ICE Benchmark’s announcement of its consultation regarding the cessation of USD LIBOR after June 30, 2023, how the proposed cessation might play out, and implications under the fallback calculation methodology of the ISDA IBOR Fallbacks Protocol.
ISDA 2020 IBOR Fallbacks Protocol FAQs
International Swaps and Derivatives Association, 23 October 2020
Questions and answers that are designed to explain the basic operation and application of the IBOR Fallbacks Protocol.
Replays of all of our IBOR Transition Webinar Series presentations are available via iTunes podcasts, Google play or Spotify, as well as on the IBOR Transition Webinar Series page of our dedicated IBOR Transition portal.