LIBOR cessation
All LIBOR panel bank settings have now ceased. LIBOR continues to be published under a changed methodology (so-called "synthetic LIBOR") as follows:
- 3 month sterling LIBOR until 28 March 2024
- 1, 3 and 6 month US dollar LIBOR until 30 September 2024
Synthetic LIBOR should not be used for new contracts.
For other (non-LIBOR) rates, see the relevant sections below.
Contracts which continue to reference LIBOR
English law legislative solution for Tough Legacy Contracts and use of synthetic USD LIBOR
The Critical Benchmarks Act (see our briefings Synthetic LIBOR and contractual continuity and 10 things you need to know about synthetic LIBOR and the Critical Benchmarks Act) essentially provides that references to LIBOR in English law contracts will be read as references to LIBOR as it continues to be published under the changed methodology (synthetic LIBOR). This means that, generally, contracts referencing LIBOR which have not been amended will continue to reference LIBOR (i.e. synthetic LIBOR). There are some exceptions to this where the contracts contain fallbacks which have been included in documentation in contemplation of LIBOR cessation (for example a fallback or rate switch to another reference rate).
Parties to contracts which continue to reference LIBOR should consider taking actions necessary to determine a replacement for sterling LIBOR by 28 March 2024 and USD LIBOR by 30 September 2024, which is when publication of synthetic sterling and USD LIBOR settings respectively are expected to cease.
US law legislative solution for Tough Legacy Contracts and use of synthetic USD LIBOR
Effective 3 July 2023, the US Adjustable Interest Rate (LIBOR) Act as implemented by Regulation ZZ supplies a replacement benchmark for USD LIBOR by operation of law in contracts governed by US law (includes the laws of each US state, such as New York law) if the contract lacks adequate fallback provisions or a person authorized to select a replacement benchmark failed to do so. For most business contracts (that are not derivatives) the replacement provided pursuant to the LIBOR Act is the equivalent tenor of Term SOFR plus the applicable tenor spread adjustment.
Legacy contracts and financial instruments that refer to USD LIBOR but are outside the scope of the US LIBOR Act (for example, because a contract contains a fallback to a workable benchmark rate in the event of a market disruption event) and that do not include a fallback transition trigger related to the representativeness of USD LIBOR may refer to synthetic USD LIBOR rates (this requires case-by-case review of the relevant contractual definition of USD LIBOR). Parties to these contracts or financial instruments should consider taking actions necessary to determine a replacement for USD LIBOR by 30 September 2024, which is when publication of synthetic USD LIBOR settings is expected to cease.
For USD LIBOR swap rates, see LIBOR transition: US Dollar below.
Product areas
Recommended replacement rates vary by jurisdiction and calculation methodologies continue to develop and vary by product. Trade and other associations have worked and continue to work with the relevant jurisdiction and currency specific working groups on transition issues pertinent to their specific products, to ensure appropriate consistency for linked products and, where necessary, to update their documentation to accommodate alternative benchmark rates - see trade and industry bodies below.
