As of January 1, 2022, the US London Interbank Offered Rate, or LIBOR, can no longer be used for new loan or derivatives contracts. The phase-out of the benchmark rate, discredited by a market manipulation scandal at the height of the 2008 financial crisis, may not come as a surprise, as it was formally announced by the ICE Benchmark Administration in November 2020. Publication of the rate will cease altogether on June 23, 2023. Most big banks have been preparing for the switch, and their existing loan contracts already contain fallback language to provide for a new rate after the final LIBOR publication in 2023. But some regional banks and smaller institutions have been slower to make the transition, so borrowers are advised to take care to review their loan contracts for references to LIBOR and LIBOR replacement provisions. A more detailed discussion on this transition can be found here.
Client Alert: LIBOR and the New Year
