Across the world, regulators have ruled that, IBORs, the world’s most widely used interest rate benchmark are, due to well publicised evidence of manipulation, no longer fit for purpose and have called on all markets to actively transition to alternative benchmarks.
The London Interbank Offered Rate (LIBOR) is expected to cease at the end of 2021, and the UK regulatory authorities are now recommending that markets adopt SONIA as the replacement benchmark reference rate. In parallel, the US authorities have mandated SOFR as the new benchmark and in the EU, the methodology for EURIBOR has been revised, and a new rate, €STR has been introduced.
2020 has been an important year for LIBOR and EURIBOR transition with milestones and objectives imposed, and whilst the end of LIBOR still may “technically” be over a year away, the time for action is now, and it is imperative that firms act now in order to keep pace.
At CMS we have a multi-disciplinary team that is dedicated to support on all issues connected with IBOR transition and who are closely following IBOR transition progress. Below you will find updates and commentary on all key developments so far.