King & Spalding has a dedicated team of attorneys across several practices areas to help clients identify, assess and solve issues related to LIBOR transition across all impacted areas. The London Interbank Offered Rate (LIBOR), is the mostly widely used interest rate benchmark in the world. In 2017, the UK’s Financial Conduct Authority (the FCA) announced LIBOR will be phased out in 2021.
LIBOR is available because certain banks make LIBOR submissions. However, LIBOR has become increasingly unsustainable and undesirable, as the market underlying the determination of LIBOR is no longer as active or deep, and LIBOR relies on the expert judgment of a bank panel.
The administrators of LIBOR are expected to initially cease publication of certain rates beginning on December 31, 2021, with certain other rates (such as most tenors of US dollar LIBOR) continuing to be published through June 30, 2023. The transition from LIBOR will have material implications for financings, financial statements, auditors, etc.
Alternative reference rates (ARRs), also known as risk-free rates (RFRs), have been identified as a replacement – although creating alternatives for LIBOR is no easy task. LIBOR is linked to contracts worth trillions of US dollars. This is why we are actively involved in the industry transition with regulators, central banks and industry bodies.
September 4, 2020
Damien Marshall, Andrew Michaelson, Leigh Nathanson and Laura Harris share their thoughts on insider trading, SEC inquiries, the CFTC’s relevance, due diligence, the LIBOR transition and cryptocurrencies