Welcome to the latest issue of Mayer Brown's IBOR Transition Digest—a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates. As attention to IBOR transition accelerates and becomes more focused, it is critical to have access to comprehensive and timely resources about the market.
For additional resources and an introduction to our global
cross-practice IBOR Transition Task Force, please visit Mayer
Brown's IBOR Transition portal.
New IBOR Transition Tool | Thought Leadership | News and Developments | Events
IBOR Transition Readiness Survey
Mayer Brown IBOR portal, Introduced 17
November 2020
Our latest IBOR transition resource, an IBOR transition
readiness survey jointly developed and presented with Morae global,
helps organizations address the complex and imminent issue of IBOR
transition, with follow up guidance and checklists.
Eye on IBOR Transition from a Structured
Finance Perspective
Eye on IBOR Transition Blog, 9 December 2020
In the Winter 2020 issue of our Structured Finance
Bulletin, we explore a number of recent core global IBOR
transition developments affecting structured finance products.
A Brief Reprieve on LIBOR
Cessation
Legal Update, 7 December 2020
On November 30, 2020, ICE Benchmark Administration, the
administrator of U.S. Dollar LIBOR and other IBORs, lowered the
pressure with respect to the upcoming cessation of USD LIBOR with
its announcement of a consultation on its intent to cease
publishing the more frequently used tenors of USD LIBOR after June
30, 2023. We analyze the effect of these well-received statements
on the FRN, syndicated loan and CLO markets.
Road to Risk-Free Rates in
Japan
Eye on IBOR Transition Blog, 7 December 2020
Japan, like other countries that rely on LIBOR as the
preferred reference rate, has had to consider alternatives for its
reference rate that uses USD LIBOR as a component. In 2019, the
Cross Industry Committee on Japanese Yen Interest Rate Benchmarks,
together with the Bank of Japan, held a public consultation on the
choice of alternative benchmarks to JPY LIBOR, the results of which
revealed an industry preference for two alternatives: the Tokyo
Interbank Offered Rate ("TIBOR") and the Tokyo Overnight
Average Rate.
IBOR Transition – Hong Kong
Regulatory Guidance
Eye on IBOR Transition Blog, 3 December 2020
The reform of the benchmark interest rate has significant
implications for implications for Authorised Institutions
("AIs") in Hong Kong. The Hong Kong Monetary Authority
has issued a number of Circulars to AIs regarding benchmark rate
reforms since March 2019, requiring AIs to get ready for the
transition. Similar to the regulators in other jurisdictions, HKMA
mainly focuses on bank conduct and treat-customer-fairly
principles, and readiness of systems and operations ahead of the
transition.
United States – General
Guide on the Endgame for USD
LIBOR
Alternative Reference Rates Committee, 4 December
2020
Explaining what market participants need to know after the
November 30 announcements by U.S. and UK regulators and LIBOR's
administrator regarding the end of U.S. Dollar LIBOR.
United Kingdom – General
ICE LIBOR Consultation on Potential
Cessation
ICE Benchmark Administration, 4 December 2020
As announced on 18 and 30 November, ICE Benchmark
Administration has published a consultation on its intention to
cease publication of (a) all tenors of GBP, EUR, CHF, and JPY
LIBOR, as well as 1-week and 2-month USD LIBOR after 31 December
2021 and (b) all remaining tenors of USD LIBOR after June 30, 2023.
Comments are due by January 25, 2021.
Asia and Pacific Rim – Syndicated and Bilateral Loans
Example of the spread adjustment
methodology using the "historical median approach over a
5-year lookback period" applicable to TIBOR as the replacement
benchmark for loans
Bank of Japan, 30 November 2020
Prepared by the Sub-Group on Loans and presented at the
November 5 working group meeting.
Asia and Pacific Rim – General
Response to Feedback on SIBOR Reform and
the Future Landscape for SGD Interest Rate Benchmarks
Consultation
The Association of Banks in Singapore, Singapore Foreign
Exchange Market Committee, and Steering Committee for SOR &
SIBOR Transition to SORA, 11 December 2020
Setting forth milestones for the discontinuance of SIBOR
based on the 74 responses to the July 2020 consultation, which had
recommended the discontinuation of SIBOR in three to four years.
The joint industry response noted the respondents' broad
support for the proposed SIBOR discontinuation and timelines,
including the proposal to discontinue 6-month SIBOR before the
other tenors, given its low market usage and a lack of transactions
to underpin the publication of this benchmark. Responses to the
consultation showed a strong consensus among the respondents for a
shift towards a SORA-centered SGD interest rate market, which would
allow for more transparent market pricing for borrowers, and more
effective interest rate risk management for lenders.
Global – General
The Path Forward for LIBOR - Webcast and
related full transcript
International Swaps and Derivatives
Association, 4 December 2020
A webcast answering a series of questions presented by
market participants regarding ICE Benchmark's announcement of
its consultation regarding the cessation of USD LIBOR after June
30, 2023, how the proposed cessation might play out, and
implications under the fallback calculation methodology of the ISDA
IBOR Fallbacks Protocol.
ISDA 2020 IBOR Fallbacks Protocol
FAQs
International Swaps and Derivatives Association, 23 October
2020
Questions and answers that are designed to explain the basic
operation and application of the IBOR Fallbacks Protocol.
Replays of all of our IBOR Transition Webinar Series presentations are available via iTunes podcasts, Google play or Spotify, as well as on the IBOR Transition Webinar Series page of our dedicated IBOR Transition portal.
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.