As the Libor endgame continues to count down, what rates are America’s large and midsize banks planning to adopt to update their risk models?
The Alternative Reference Rates Committee this week issued a set of principles that will guide its efforts to recommend a forward-looking Secured Overnight Financing Rate term rate.
With Libor slated to sunset by the end of 2021, banks need to identify and mitigate their Libor transition risks. According to Fed leadership, “The firms we supervise should be aware of the intense supervisory focus we are placing on their transition and especially on their plans to end issuance of new contracts by year end.” Overall, the Libor transition is something bankers will want to have their arms firmly wrapped around sooner rather than later.
U.S. dollar Libor will officially come to an end starting this year. With just months to go in the transition effort, banks face a variety of challenges.
With the publication of all tenors of London Interbank Offered Rate set to cease after June 30, 2023, the Alternative Reference Rates Committee today outlined a model for using the Secured Overnight Financing Rate—the ARRC’s preferred Libor alternative—in asset-backed securities products, including non-collateralized loan obligation asset-backed securities, mortgage-backed securities and commercial mortgage-backed securities products.
As part of its ongoing effort to support the transition away from the London Interbank Offered Rate, the Alternative Reference Rates Committee today supplemented its recommended hardwired fallback language for syndicated and bilateral business loans that reference U.S. dollar Libor.
The Alternative Reference Rates Committee today said it “will not be in a position” to recommend a forward-looking term rate using the Secured Overnight Financing Rate by mid-2021.
n a Bloomberg op-ed today, Tom Wipf, chairman of the Alternative Reference Rates Committee, emphasized the need for public and private sector participants to work together in preparation for the cessation of the London Interbank Offered Rate.
The administrator of the London Interbank Offered Rate has made what was expected official: the widely used benchmark will cease publication, with certain Libor tenors ceasing as soon as the end of 2021.
With the COVID-19 pandemic highlighting the “fundamental weakness” in the London Interbank Offered Rate, financial…