Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community

Welcome News in Financial Circles: LIBOR Termination Extended Briefly

On November 30th, LIBOR administrator, ICE Benchmark Administration (“IBA”), announced plans to ease worries surrounding LIBOR cessation with a brief extension to June 30, 2023.  IBA’s intention is to cease publication  (i)  of 1-week and 2-month USD LIBOR at the end of 2021 and (ii) subject to compliance with applicable regulations, including as to representativeness, it does not intend to cease publication of the remaining USD LIBOR tenors until June 30, 2023.  This IBA announcement followed an earlier IBA announcement on November 18, 2020, that all GBP, EUR, JPY, and CHF IBOR tenors would cease publication after December 31, 2021.

The likely extension of rate settings beyond that date with respect only to specified USD LIBOR settings demonstrates the profound impediments confronting market participants in their efforts to transition from USD LIBOR.  Integration of a replacement rate such as Secured Overnight Financing Rate (SOFR) might be delayed past December 31, 2021.  Despite the extra time, regulators and industry leaders still urge market participants to implement changes as quickly as possible.  Specifically:

  • Banks are encouraged to stop entering into new USD LIBOR contracts “as soon as practicable,” and by no later than December 31, 2021;
  • Entry into such contracts after December 31, 2021, would create safety and soundness risks for banks;
  • The USD LIBOR June 30, 2023, cessation date will allow more time for existing legacy USD LIBOR contracts to mature; and
  • Banks should use this extra time to continue to prepare for the transition away from LIBOR.

We will continue to monitor this and report in the Rimon IM Report.

About the author

Debbie represents private investment funds and investment advisers in connection with fund structuring, advertising, private placement procedures, compliance policies and procedures, side letters, placement contracts, related agreements and issues. Debbie’s experience includes private equity funds, venture capital funds complex partnership reorganizations, domestic and offshore hedge funds, Opportunity Zone Funds, real estate investment funds and trusts, EB-5 funds, and large master-feeder structures.  Debbie has extensive experience with private securities offerings and financial products, including through crowdfunding, domestic and international joint ventures, global equity offerings, where she represents placement agents, issuers, broker-dealers, public and private companies, investment banks, financial institutions, private funds, and investment advisers.

Debbie also represents family offices, private funds, investment advisers and other clients in connection with impact investing including establishing Environmental, Social, and Governance (ESG) investment policies and practices and with policies regarding anti-money laundering (AML), Foreign Corrupt Practices Act (FCPA), derivatives and FINRA and SEC-compliant investment regimes and operations.

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Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community