The UK Financial Conduct Authority has warned that the London Interbank Offered Rate (LIBOR) is not likely to be published after 2021. What will happen to LIBOR-based municipal securities, loans, and derivatives that extend beyond 2021, if and when LIBOR goes away?
The contracts could be remediated by pending New York and possible federal LIBOR relief legislation. For new contracts, municipal securities issuers and conduit borrowers may be asked to incorporate a new “hard-wired” fallback rate recommended by ARRC or ISDA. For existing (or legacy) contracts, they may soon be asked to enter into bilateral amendments or, in the case of derivatives, to adhere to a recently announced ISDA remediation protocol. What should they do to protect themselves?
In a recent client update on the LIBOR Transition, Fredric A. Weber, Of Counsel in the Norton Rose Fulbright Houston office, and Stephen J. Watson, Partner in the Norton Rose Fulbright Washington DC office, discuss the challenges of the upcoming discontinuance of LIBOR and possible protective action that can be taken by municipal securities issuers and conduit borrowers.
Norton Rose Fulbright has assembled a group of its attorneys from around the globe to stay on top of these issues and assist clients in the transition to new reference rates, including the use of artificial intelligence (AI) programs to assist in reviewing large contract inventories. More information can be found on our dedicated IBOR and benchmark webpage.