The South African benchmark reform process has now entered a decisive phase. In line with the updated “no new JIBAR” recommendations from the Market Practitioners Group; , the market is expected to cease originating new transactions referencing the Johannesburg Interbank Average Rate (JIBAR) from the beginning of May 2026 and instead, focus on their contractual and operational readiness to originate facilities referencing the new South African Overnight Index Average (ZARONIA) from day one. This “no new JIBAR” milestone marks the shift from awareness to implementation. While JIBAR will continue to be published until its anticipated cessation on 31 December 2026, the South African Reserve Bank (SARB) and its Market Practitioners Group (MPG) have been clear that the remaining period is intended for participants across the loans, derivatives and capital markets are expected to begin implementing their transition strategies for the orderly migration of existing exposures to ZARONIA.
This article focuses on the contractual mechanisms that have already been developed to facilitate this transition for participants who have already identified their existing JIBAR-linked exposures. For existing JIBAR contracts that will continue beyond the expected cessation date, the relevant transition tool will depend on the type of instrument. The sections below summarise the principal transition tools available across the loans, derivatives and bond markets and the practical steps companies can now take to begin implementing them.
Loans
Within the loan market, the Loan Market Association (LMA) has developed rate switch provisions tailored to the JIBAR-to-ZARONIA transition, reflected in the South African Rate Switch Agreement, formally published by the SARB in May 2025 (the Rate Switch Agreement). This Rate Switch Agreement is an amendment agreement that operates by introducing language into a facility (initially referencing JIBAR), that allows it to automatically transition to ZARONIA upon a specified future date or trigger event. The agreement incorporates the required operational mechanics within its schedules, producing loan documentation that already contains the contractual pathway for transition. As a result, the parties would not be required to renegotiate the facility when JIBAR ultimately ceases. Importantly, these mechanisms allow counterparties to choose the timing of their transition, meaning the switch to ZARONIA does not necessarily need to coincide with the final cessation date. This flexibility allows lenders and borrowers to transition earlier as their operational readiness improves and effectively curbs existing legacy exposures.
As a practical step for the loan market: companies should now review their loan portfolios to identify facilities referencing JIBAR that mature beyond 2026 and engage with their lenders to determine whether rate switch provisions or amendments introducing ZARONIA transition mechanics can be incorporated into those agreements. Where new facilities are being negotiated, parties should consider originating directly on ZARONIA or embedding rate switch provisions at the outset.
Derivatives
In the derivatives market, where the largest volumes of JIBAR-linked exposures currently sit, the transition is being implemented primarily through the International Swaps and Derivatives Association (ISDA)'s fallback framework. In April of 2025, ISDA updated its 2021 Interest Rate Derivatives Definitions (the standard contractual reference for global interest rate derivates trading), to incorporate JIBAR fallback provisions. These provisions serve to retain JIBAR where it continues to be published but provide for an automatic fallback to a ZARONIA-based all-in rate [expressed as ZARONIA compounded in arrears over the relevant tenor, with a two day backward shift and a spread adjustment] once JIBAR ceases. The applicable fallback rate will be calculated and published by Bloomberg, meaning market participants will not need to independently calculate the replacement benchmark. The updated definitions will apply automatically to derivatives contracts entered into after April 2025 that incorporate the 2021 ISDA Definitions.
For derivatives contracts entered into prior to April 2025, the fallback provisions will apply only where both counterparties have adhere to the 2025 Benchmark Module of the ISDA 2021 Fallbacks Protocol. This process involves each counterparty completing the ISDA online adherence process once off, as to become part of the published List of Adhering Parties, so that the fallback provisions are deemed incorporated into their existing derivates contracts.
Importantly, these provisions do not change the reference rate at trade inception. Instead, they embed fallbacks that activate upon cessation, ensuring that contracts continue to function without the need for renegotiation when JIBAR ultimately ceases. As the next practical step for the derivatives market: participants should determine whether their contracts already incorporate the updated ISDA definitions, ensure their familiarity with the full expression of the all-in rate and complete the ISDA protocol adherence as necessary; so that fallback provisions are contractually embedded before cessation.
Bonds
As amendments to bond instruments typically require formal consent solicitations from noteholders, the transition away from JIBAR in the capital markets will depend heavily on well-coordinated engagement between issuers, arrangers, investors and professional advisers. Clear communication will be essential, both through formal consent solicitations and through informal investor engagement channels, to explain the rationale for adopting ZARONIA as the replacement benchmark and to address value-transfer considerations.
The experience gained by the International Capital Market Association (ICMA) during the LIBOR transition demonstrated that consent solicitations can take significant time to complete and require broader market coordination and clarity around acceptable transition approaches, particularly where investors were evaluating multiple consent requests across different instruments. Where issuers delayed initiating consent exercises, some transactions were forced to rely on default fallback provisions, which often proved too [vague/imprecise] to effectively preserve the intended economic outcomes of the instruments. Issuers with JIBAR-linked bonds maturing beyond 2026 should therefore reviewing bond documentation to determine consent thresholds and amendment mechanics and engage arrangers and legal advisers as early as possible to establish how best to prepare and effectively communicate their consent solicitation strategies and investor communication plans.
Over the coming months, market participants should expect the ZARONIA transition to move rapidly from policy discussion to documentation execution. With the “no new JIBAR” milestone now reached and cessation scheduled for the end of 2026, the focus for market participants should now shift to the practical work of embedding transition mechanics into existing contracts. Whether through loan amendments, derivatives protocol adherence or bond consent solicitations, the coming period will require coordinated engagement between borrowers, lenders, issuers, investors and advisers. Firms that begin this process early will be better positioned to manage operational readiness and avoid the legal and economic uncertainty that could arise if large volumes of JIBAR-linked contracts remain unresolved as the cessation date approaches.
