On November 18, 2020, ICE Benchmark Administration (“IBA”), the FCA-regulated and authorized administrator of LIBOR, announced that it will consult on plans to cease euro, sterling, Swiss Franc and yen LIBOR at the end of 2021. US Dollar LIBOR, however, was noticeably excluded from such announcement. Some news outlets and market participants are speculating that the omission of US Dollar LIBOR from the announcement may be a sign that cessation of US Dollar LIBOR may be postponed or delayed, especially given the slower transition pace away from US Dollar LIBOR and concerns over SOFR as a replacement benchmark.
No doubt in response to the speculation, the Federal Reserve Bank of New York, however, continued to express its support for a transition away from LIBOR, encouraging the market to move forward with its transition plans, even tweeting a parody of The Mamas & The Papas 1966 hit song California Dreamin’ on November 19th “All the leaves are brown / And the sky is gray / Prepare for the end of LIBOR / It’s a great idea today / You’ll feel safe and warm / If you start today” and noting that 409 days remain in the countdown to the end of LIBOR.
The International Swaps and Derivatives Association (“ISDA”) also issued a statement that the announcement from the IBA does not “constitute an index cessation event under the IBOR Fallbacks Supplement or the ISDA 2020 IBOR Fallbacks Protocol. Therefore, these statements will not trigger the fallbacks.”
As the start of the new year approaches, market participants are closely monitoring regulators and market developments on the LIBOR transition front.
If you would like further information about this or any other matter, please feel free to contact any member of the Global Bank and Institutional Finance & Restructuring Group or the LIBOR Transition Task Force.