Benchmark Discontinuation: Staying Afloat

November 16, 2018

LIBOR and EURIBOR are likely to disappear soon, and work on replacement benchmarks is far from complete.

Market participants need to start preparing quickly to avoid significant financial risk and potential litigation.

  • LIBOR is likely to phase out at the end of 2021, and EURIBOR at the beginning of 2020.
  • It is critical to begin planning now for instruments or contracts that refer to LIBOR or EURIBOR and will be outstanding at that time—e.g., floating-rate bonds, loans, securitizations, derivatives, and commercial contracts.
  • Issuers of floating-rate instruments should also have a game plan to address potential litigation when a fallback provision is invoked to change the rate index.

To help, we have prepared a short summary of the key issues. We’ve also prepared a practical checklist that market participants can use to manage their preparation work on the financial, legal, tax, and accounting issues.

Our note includes details of our benchmark transition team, but you should of course feel free to reach out to your regular contacts to discuss how best to implement the checklist or for questions about these issues.