Nathan Leavitt is a Partner and Yue Qi is an Associate
in the
San Francisco office
By 2021, it is likely that LIBOR will no longer exist, and even
more likely that it will no longer be the leading global benchmark
interest rate. This news comes from the U.K. Financial Conduct
Authority's (FCA) announcement that after 2021, it will no
longer make the reporting of interbank lending transactions on
which LIBOR is based mandatory.1 That change, together
with criticism that LIBOR rates are no longer supported by
sufficient underlying market data and the rate fixing scandals in
recent years suggest LIBOR's days are numbered.
The discontinuance of LIBOR would affect most financial markets,
including the aviation finance industry. Many aviation finance
transactions incorporate some form of a floating rate based on
LIBOR whether it be in the form of a floating rate loan, floating
rent rate, or default interest rate pegged to the benchmark. It is
prudent to assess existing
