Draft New York State Budget Addresses LIBOR Transition

Following requests from industry, New York State incorporated legislative language addressing the expected discontinuance of LIBOR in its recently released draft budget. The draft language amends the General Obligations Law to require New York law-governed contracts without LIBOR fallback provisions to use the replacement rate recommended by the Alternative Reference Rates Committee (ARRC).¹

Background

The U.K. Financial Conduct Authority (FCA), which regulates LIBOR, has made clear that it will not compel banks to make LIBOR submissions beyond 2021. Together with other official sector bodies, it has strongly advised industry to transition away from reliance upon LIBOR. The ICE Benchmark Administration, LIBOR's administrator, has recently issued consultations to cease publishing the most commonly used USD LIBOR settings on June 20, 2023. Despite the potential extension of the timeline for certain settings, the official guidance to industry to transition away