In our January 22, 2021 article, we discussed that on November 30, 2020, ICE Benchmark Administration (IBA) announced that it would “consult” with its regulator (the Financial Conduct Authority (FCA)) on its intention to cease publication of the various existing LIBOR tenors (in U.S. Dollars and other currencies).
On March 5, 2021, IBA confirmed, the timetable for the cessation of LIBOR tenors, as summarized below:
|LIBOR Tenor||Cessation Date|
|USD 1-week and 2-month||12/31/2021|
|USD overnight & 1,3, 6 and 12 months||6/30/2023|
|All tenors- euro, yen, Swiss francs and sterling||12/31/2021|
The delayed cessation of the 1, 3, 6 and 12 month USD LIBOR tenors until June 30, 2023 will permit that 1, 3, 6 and 12 month USD LIBOR tenors in legacy transactions to expire on the last day of such tenors. Since 1-week and 2-month USD LIBOR tenors are rarely used in floating-rate commercial loan facilities, we don’t expect much pushback in the market when those USD LIBOR tenors are no longer available.
The LIBOR cessation dates (and possibly, this announcement by IBA itself) will be “trigger events” for the LIBOR fallback provisions in credit agreements and swap documents. Since March 5, agents in syndicated loan transactions have begun to issue alerts to the borrowers and lenders in their facilities that summarize the trigger events. All lenders should determine if and when any notice is required to be sent to borrowers under its LIBOR fallback language as a result of this announcement.
For assistance with notices or for any questions, please reach out to the authors below or your regular Thompson Coburn contact. We will continue to periodically provide our clients with information and updates on LIBOR as the cessation dates approach.
Ruthanne Hammett and David Rubin are partners in Thompson Coburn’s Commercial Finance and Banking practice area.
Although we would like to hear from you, we cannot represent you until we know that doing so will not create a conflict of interest. Also, we cannot treat unsolicited information as confidential. Accordingly, please do not send us any information about any matter that may involve you until you receive a written statement from us that we represent you (an ‘engagement letter’).
By clicking the ‘ACCEPT’ button, you agree that we may review any information you transmit to us. You recognize that our review of your information, even if you submitted it in a good faith effort to retain us, and, further, even if you consider it confidential, does not preclude us from representing another client directly adverse to you, even in a matter where that information could and will be used against you. Please click the ‘ACCEPT’ button if you understand and accept the foregoing statement and wish to proceed.