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Refinitiv to facilitate industry transition from USD LIBOR

by LLB Reporter
12th Jul 22 11:47 am

Refinitiv today announces that it intends to launch forward looking term rate versions of its ARRC recommended fallback rates – USD IBOR Cash Fallbacks – in September 2022.

This follows the Alternative Reference Rates Committee’s (ARRC) March 2021 announcement that it had selected Refinitiv to publish its recommended fallback rates for cash products and Refinitiv’s November 2021 announcement that it had released production fallback rates based upon various SOFR conventions.

LIBOR is one of the most widely used benchmarks in the world. On March 5, 2021, the Financial Conduct Authority (FCA) announced that immediately following June 30, 2023, overnight, 1-month, 3-month, 6-month and 12-month US Dollar LIBOR settings will cease or be no longer representative.

There are trillions of dollars of cash products such as loans, bonds and securitized products that reference LIBOR and mature after June 30, 2023, which will use the ARRC’s recommended fallback rates through use of appropriate fallback language or New York and Federal laws.

USD IBOR Cash Fallbacks will help these legacy USD LIBOR contracts to smoothly transition away from USD LIBOR and provide market participants, including lenders and borrowers, with an industry standard agreed rate, which can clearly and easily be referenced in contracts.

Refinitiv today announces that it intends to launch forward-looking term rate versions of USD IBOR Cash Fallbacks in September 2022. These rates will be based upon CME Term SOFR plus the ARRC’s recommended spread adjustments. There are two versions of the Refinitiv USD IBOR Cash Fallbacks: one for institutional cash products, the other for consumer cash products. The term rate versions of both USD IBOR Cash Fallbacks will be available as all-in spread adjusted rates in 1-month, 3-month 6-month and 12-month tenors.

Forward looking term rate versions of USD IBOR Institutional Cash Fallbacks will be launched as production benchmarks and USD IBOR Consumer Cash Fallbacks will initially be launched as prototype rates with the intention that these rates will enter production immediately following June 30, 2023, when the ARRC’s recommended spread-adjustments for consumer products will be officially set.

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