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LIBOR

On 27 July 2017, Andrew Bailey, Chief Executive of the UK Financial Conduct Authority, made a speech about the future of LIBOR stating that market participants should not rely on LIBOR being available after 2021. It is by no means certain that LIBOR will cease to be published post-2021, however, the LMA is working with the market, other trade associations and the regulators on contingencies should that prove to be the case at some future date.

What's New?

Working Group on Sterling RFRs issues statement on next steps for LIBOR transition and development of term Sonia reference rate

The Working Group on Sterling Risk-Free Reference Rates (the "Working Group") has issued a statement on the next steps for LIBOR transition and development of a forward-looking term SONIA reference rate ("TSRR"). The Working Group is inviting interested benchmark administrators to share any views on the development of a TSRR by 15 February 2019.

Working group on euro risk-free rates seeks market feedback on transition from EONIA to ESTER and ESTER-based term structure methodologies

The working group on euro risk-free rates has published a report on the transition from the euro overnight index average ('EONIA') to the euro short-term rate ('ESTER') and a second public consultation on determining an ESTER-based term structure methodology as a fallback in EURIBOR-linked contracts.

Both papers seek feedback from market participants and other stakeholders by 17:00 Central European Time on 1 February 2019.

IBA launches survey on the use of LIBOR – responses requested by 15 February 2019

ICE Benchmark Administration ("IBA") has recently launched a survey on the use of LIBOR currencies and tenors to identify the most widely used LIBOR settings.

The survey closes on 15 February 2019 and we would encourage LMA members to take part in the survey.

Working Group on Sterling Risk-Free Reference Rates communication pack and newsletter on LIBOR transition

The Working Group on Sterling Risk-Free Reference Rates ("RfRWG") has published a communication pack entitled "Preparing for 2022: what you need to know about LIBOR transition".

The RfRWG has also published a newsletter which provides updates on current work streams, market transition developments, relevant official sector announcements and risk-free rate transition liquidity indicators.

Working Group on Sterling RFRs publishes summary of responses to consultation on Term SONIA reference rates

The Working Group on Sterling Risk-Free Reference Rates has published a summary of responses to its consultation on forward-looking Term SONIA Reference Rates ("TSRR").

LIBOR Trade Association Working Group – Publication of minutes

Since Andrew Bailey's speech of July 2018, trade associations representing different product areas across the global financial markets have been in regular communication to discuss the key issues involved in the transition away from LIBOR to risk-free rates and to update each other on developments in relation to the transition. To raise awareness of this global and cross-product communication, minutes of the meetings of this joint group will be published going forward.

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LMA News H1 2018 - The transition from LIBOR to risk-free rates: taking stock and looking forward

In the last LMA newsletter (H2 2018), the article "Developments in respect of LIBOR and the move to risk-free rates" provided an update on developments in respect of each of the LIBOR currencies and the LMA's continued work on LIBOR transition. This article provides an update on the LMA's work on the transition away from LIBOR and a summary of the most recent developments in respect of each LIBOR currency as we look forward to 2019.

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Life beyond IBORS: finding sustainable benchmarks for the loan market

This is a recording of the IBOR panel session from our annual conference in London on 25 September. Speakers were: chair: Clare Dawson, Chief Executive - LMA; and panellists: Mark Campbell, Special Counsel - Clifford Chance; Brian Fraser, Senior Manager, Loan Operations - Lloyds Banking Group; Ellen Hefferan, Executive Vice President of Operations & Accounting - LSTA; Jaap Kes, Head of Market Risks & Execution - ING Group Treasury; and Edwin Schooling Latter, Head of Markets Policy Department - FCA.

LMA publishes updated version of revised Replacement of Screen Rate clause, which is now publicly available on the Bank of England website

The LMA has published an updated version of its "Revised Replacement of Screen Rate Clause". This update takes into account the publication of the Clause by the Sterling Risk-Free Rate Working Group. The wider publication of this language is an important step in raising awareness of the implications of the transition away from LIBOR and the need for parties to consider appropriate provisions for documentation referencing LIBOR. Click here to access

Selection of ESTER as the new euro risk-free rate

On 13 September 2018, the working group on euro risk-free rates recommended the euro short-term rate (ESTER) as the risk-free rate for the euro. ESTER will replace EONIA, which no longer meets the criteria of the EU Benchmarks Regulation ("BMR") and so will see its use restricted as of 1 January 2020. ESTER will also provide a basis for developing fallbacks for contracts referencing EURIBOR, as the compliance of its new hybrid methodology with the BMR will be assessed in 2019 (with no guarantee of a favourable outcome).

LMA and ACT paper on syndicated loans and forward-looking term rates

This joint publication by the LMA and ACT considers the use of forward-looking term rates in the syndicated loan market. In particular, it covers the key features of syndicated loans impacted by the transition from LIBOR to overnight risk-free rates, along with the implications for both borrowers and lenders of the transition. Click the arrow to access this article.