LIBOR Transition: Preparing For The End Of LIBOR

For the past several years, loan market participants have been well aware of the anticipated phase-out of the London Interbank Offered Rate ("LIBOR") as a benchmark for floating rate instruments. Based on current regulatory guidance, the official end of LIBOR may not occur until after the end of 2021, when banks that have participated in the determination of LIBOR will no longer be required to make LIBOR submissions. However, loan market participants are strongly advised to take action now, to ensure their loan documentation permits the efficient replacement of LIBOR with another suitable benchmark rate at the appropriate time.

Why is LIBOR likely going away?

For decades, LIBOR has been the standard floating rate benchmark for debt instruments of all kinds around the world, calculated every banking day by polling major banks on their estimated borrowing costs for various currencies and tenors. However, during and after the last financial crisis of 2008-2009, the