FCA Extends Timeline to Cease Issuance of LIBOR-Linked Loan Products

The RFRWG, FCA, and BoE recognize that it will not be feasible to complete transition away from LIBOR across all new sterling LIBOR-linked loans by the original target of the end-of-the-third quarter of 2020. There will likely be continued use of LIBOR-referencing loan products into the fourth quarter of 2020 in particular, to maintain the smooth flow of credit to the real economy. Taking this into consideration, the RFRWG recommends that:

• By the end of the third quarter of 2020, lenders should be in a position to offer non-LIBOR linked products to their customers.
• After the end of the third quarter of 2020, lenders, working with their borrowers, should include clear contractual arrangements in all new and re-financed LIBOR-referencing loan products to facilitate conversion ahead of the end of 2021, through pre-agreed conversion terms or an agreed process for renegotiation, to SONIA or other alternatives.
• All new issuance of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of the first quarter of 2021.

Once plans and working arrangements disrupted by the COVID-19 outbreak begin to stabilize, the working group (RFRWG) and its members will intensify communication with customers needing to move away from LIBOR as part of transition.

Related Link: FCA Statement

Keywords: Europe, UK, Banking, Securities, LIBOR, COVID-19, SONIA, IBOR Reform, Benchmark Reform, Interest Rate Reform, BOE, FCA