Overview

A new era has begun! The final publication of a representative LIBOR occurred on June 30, 2023; the cessation date for US Dollar LIBOR tenors. We will continue to keep our eye on developments with continuing global transition away from interbank offered rates, as well as with respect to synthetic LIBORs.

In 2017, in response to the decline in eligible term borrowing transactions underlying the London Interbank Offered Rate (LIBOR) and with little prospect of these markets becoming substantially more active in the near future, the UK Financial Conduct Authority announced that it no longer would compel panel banks to quote LIBOR after December 31, 2021.

On March 5, 2021, ICE Benchmark Administration (IBA), the administrator of LIBOR, announced its intent to cease publication of all GBP, EUR, CHF, and JPY LIBOR settings, and the 1-week and 2-month USD LIBOR settings, following publication on December 31, 2021, and the overnight and 1-, 3-, 6-, and 12-month USD LIBOR setting following publication on June 30, 2023, subject to the UK Financial Conduct Authority (FCA) exercising its proposed new powers to compel continuing production of the rates on a synthetic basis. Although the March 5 announcements triggered the implementation of most recommended forms of LIBOR fallback language, the immediate effect was to set the fixed fallback rate spread adjustments and, depending on contractual language, trigger a notice obligation on the part of credit providers. The move to applicable fallback rates did not occur until relevant LIBOR publication ceased and became nonrepresentative.

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