Yesterday, the FCA, Bank of England and members of the Working Group on Sterling Risk-Free Reference Rates released a statement on the impact of COVID-19 on firms’ LIBOR transition plans.
The key message is that LIBOR will not be published after the end of 2021 and the current situation has not changed this date. As such, firms need to ensure that LIBOR transition remains a key focus.
That said, the statement acknowledges that COVID-19 will have an impact on some aspects of the transition programmes for many firms, particularly for those parts of the market that have made less progress in transition and are therefore still more reliant on LIBOR. The statement specifically refers to the loan market as an example.
Therefore, whilst COVID-19 may impact some of the interim transition milestones, firms still need to focus on this task as the ultimate deadline is unlikely to change.
The central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed and should remain the target date for all firms to meet. The transition from LIBOR remains an essential task that will strengthen the global financial system. Many preparations for transition will be able to continue. There has, however, been an impact on the timing of some aspects of the transition programmes of many firms