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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.

Also on March 5, 2021, FCA announced that it did not intend to exercise such powers with respect to EUR and CHF LIBOR, but would consult on compelling a synthetic GBP and JPY LIBOR for 1-, 3-, and 6-month settings. Subsequently it also consulted on compelling publication of a synthetic USD LIBOR. FCA announced its decision to publish synthetic versions of JPY, GBP, and USD LIBOR. As of June 30, 2023, synthetic versions of GBP and USD continue to be published. 1-, 3-, and 6-month settings of USD LIBOR will be published through September 2024, and the 3-month setting of GBP LIBOR will be published through March 2024. FCA has been clear that these synthetic rates are not representative of their underlying markets. The purpose of the synthetic rates is to support an orderly runoff of difficult-to-amend (or “tough”) legacy contracts. 

The transition from LIBOR to alternative benchmark interest reference rates is proving to be one of the most fundamental changes to the financial services industry in recent times. LIBOR is used in more than $300 trillion of mortgages, commercial loans, bonds and derivatives, with interest rate derivatives accounting for nearly 90 percent of the outstanding gross notional value of financial products that reference LIBOR.

Applicable regulators continue to emphasize safety and soundness concerns with interbank offered, and other credit sensitive, rates. Market participants have ample resources to transition to new risk-free rates, and this page serves as a repository of many of those resources.

 The problem of IBOR transition is global and complex, involving regulators and trade organizations across dozens of countries and currencies.

Through our global presence, deep knowledge of the affected markets and products, participation in many trade and industry groups and considerable experience in using a variety of technology solutions (including artificial intelligence and other technology-assisted review tools), Mayer Brown is uniquely positioned to advise financial institutions and other affected market participants as they continue to navigate this complex problem. Our IBOR Transition Task Force, composed of over 90 lawyers globally, is perhaps the best reflection of our strength and depth.

We have created a number of resources providing comprehensive information on the background of LIBOR and other IBORs, the latest market developments and our thought leadership, including:

  • Eye on IBOR Transition Blog: Concise and current updates from our global, cross-practice IBOR experts, in a bite size format, of continuing regulatory and legislative announcements, trade group tools, and the status of market transition.
  • IBOR Transition Digest: A compendium of global regulatory and market news as well as insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates.
  • IBOR Transition Webinar Series: Detailed discussion and insight—in a digestible format— on a range of topics from setting and executing an effective IBOR Transition strategy to assessing the impact of IBOR issues on specific financial products.

We highlight these resources and our extensive experience in this short video.

Highlights

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Mayer Brown is a global legal services provider comprising associated legal practices that are separate entities, including Mayer Brown LLP (Illinois, USA), Mayer Brown International LLP (England & Wales), Mayer Brown Hong Kong LLP (a Hong Kong limited liability partnership) and Tauil & Chequer Advogados (a Brazilian law partnership) (collectively, the “Mayer Brown Practices”). The Mayer Brown Practices are established in various jurisdictions and may be a legal person or a partnership. PK Wong & Nair LLC (“PKWN”) is the constituent Singapore law practice of our licensed joint law venture in Singapore, Mayer Brown PK Wong & Nair Pte. Ltd. Mayer Brown Hong Kong LLP operates in temporary association with Johnson Stokes & Master (“JSM”). More information about the individual Mayer Brown Practices, PKWN and the association between Mayer Brown Hong Kong LLP and JSM (including how information may be shared) can be found in the Legal Notices section of our website.

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