A Guide to IBOR Transition
By the end of 2021, the London Interbank Offered Rate (LIBOR), for long the world’s most widely used benchmark interest rate, will have been phased out as markets transition to LIBOR alternatives. This Guide to IBOR Transition sets out, why this change became necessary, the new breed of risk-free rates (RFRs) and the path to transition
In January 2020, the Bank of England described the year ahead as “critical” for LIBOR transition and urged firms to accelerate efforts in ensuring they were prepared for LIBOR cessation by the end of 2021. Subsequent disruption caused by the Covid-19 pandemic has not altered this approaching deadline; after four decades as a widely-used interest rate benchmark for financial products ranging from bonds and loans to derivatives and mortgage-backed securities, the end of LIBOR is now only months away.
LIBOR’s approaching demise has promoted efforts to adopt variety of alternative reference rates, including specially developed risk-free rates (RFRs). This Guide to IBOR Transition details the market developments so far and offers some practical guidance to create a successful transition roadmap for the remainder of the journey.
“The message for anyone impacted by the discontinuation of LIBOR is to be prepared”, says David McNally, IBOR Transition Director for Corporate Banking, Deutsche Bank.
This Guide is intended to help prepare the reader for the journey away from using LIBORs, focussing on the following topics:
- Background to inter-bank lending market
- IBOR reform
- Transition arrangements
- Recent market activity
- Deutsche Bank market activity
IBOR Transition Director for Corporate Bank, Deutsche Bank