Back to school...LIBOR transition activity stepping up after the summer

September 14 2020

Phil LloydHead of Market Structure & Regulatory Customer Engagement

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September is a time of new school shoes and fresh exercise books. The official sector is doing its bit with some homework of its own on LIBOR¹ transition. A host of videos, a series of papers released yesterday and a webinar on 18 September.

In a press release on 10 September aimed squarely at the corporate market holding LIBOR loans, the Sterling RFR Working Group (RFRWG) highlighted:

End of September 2020 deadline for lenders to be ready to offer RFR² loans & include 'switch language' in any new LIBOR loans
The webinar that will be hosted on Friday 18 September entitled "Is your business prepared for LIBOR transition?" (registration here)
A series of papers to support firms in their transition including (all on the BoE WG³ updates page):

Anything new?

There is nothing very earth shattering in these announcements...they cover ground already covered before, but it is clear that the official sector is keen to turn-up the heat on the corporate loan market.

The webinar on Friday 18 September from 9-11am will be a gathering of the great and the good on LIBOR transition, co-hosted by the BoE, FCA⁴, ACT⁵ and CBI⁶. It will even feature yours truly as the compère (though I wouldn't put myself in the great or good category!). The event is very much targeted at the corporate loan market.

The ‘active transition’ papers for loans and bonds speak to familiar topics for those who have read this sort of material before... know your exposure, identify alternatives, consider operational readiness etc. And most importantly do something now, don’t just wait.

But they help draw together a lot of the material in one place that has come out over the last few months or more. And the bond paper explores some of the issues around consent solicitation.

The cash credit spread adjustment paper confirms what was expected... that cash market will follow derivatives market in the 5 year median lookback methodology for fallbacks.

And finally...where's the protocol?

Not mentioned in these announcements, but the other thing everyone is waiting for in September (hopefully!) is the ISDA⁷ Fallback Protocol publication. This will really drive the transition by inserting robust contractual fallbacks into derivatives contracts, though it's worth pausing to reflect on how non-linear products are catered for. Something you will hear more from us about in due course.

So sharpen your pencils everyone, school is back and the syllabus is looking packed. See you at the webinar on the 18th!

1	LIBOR	London Interbank Offered Rate
2	RFR	Risk-free Rate
3	BoE WG	Bank of England Working Group
4	FCA	Financial Conduct Authority
5	ACT	Association of Corporate Treasurers
6	CBI	Confederation of British Industry
7	ISDA	International Swaps and Derivatives Association

LIBOR

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