On 5 March 2021, the UK Financial Conduct Authority confirmed the future cessation and loss of representativeness of: (i) all 7 euro LIBOR settings, all 7 Swiss franc LIBOR settings, the Spot Next, 1-week, 2-month and 12-month Japanese yen LIBOR settings, the overnight, 1-week, 2-month and 12-month sterling LIBOR settings and the 1-week and 2-month US dollar LIBOR settings immediately after 31 December 2021; and (ii) the overnight and 12-month US dollar LIBOR settings by 30 June 2023. Work is progressing on the transition to alternative near risk-free reference rates in each of the LIBOR currencies. The LMA is working with the market, other trade associations and the regulators on the transition.
LIBOR Transition - counting down to end-2021
US ARRC releases FAQs on best practice recommendations related to the scope of use of the SOFR term rate
The Alternative Reference Rates Committee (ARRC) has released an FAQ document on best practices related to the scope of use of the CME Group's SOFR term rates.
The FAQs explain general issues such as the ARRC's rationale for publishing its recommendation and the scope of its recommendations. It also covers more specific matters such as the use of SOFR term rates in end-user facing derivatives and the relationship between the ARRC's recommendations and supervisory expectations or CME licencing agreements for the SOFR term rate.
In this LMA podcast, Kam Mahil, Senior Director at the LMA speaks to Brian Fraser, IBOR Transition Programme – Commercial Banking at Lloyds, about operational considerations arising out of RFR-based lending.
With the end of LIBOR rapidly approaching, RFR loans will and are becoming the norm. There are a number of operational considerations in respect of such loans that market participants should be aware of. The podcast covers, amongst other things, operational considerations in respect of: interest periods; prepayments; ancillary facilities; accordion facilities; credit adjustment spreads; market disruption provisions; and tough legacy loans.
The podcast lasts approximately 37 mins.
On 29 July, we published an updated version of the list setting out RFR-referencing loans publicly disclosed to date. The update reflects SOFR transactions for: a JV managed by Van Weelde Shipping Group; Bunge (the first SOFR-linked export finance transaction in Singapore); and Oman's BankDhofar. The update also reflects the UK's first PPP LIBOR transition announced by HICL. The list is not comprehensive of all loan market transactions referencing RFRs given the private nature of the loan market.
Please contact Kam Mahil to submit a transaction to the list.