IAFEI: S&P Global Ratings

Dear Colleague,

Today, S&P Global Ratings published: “How To Say Goodbye To LIBOR Without Creating Market Chaos“.

Just like the nail-biting countdowns of yore (Y2K anyone?) there is a new date to be skittish about:  Dec. 31, 2021. After that date, the London Inter Bank Offered Rate (LIBOR)–one of the more popular reference rates to calculate interest payments on a host of financial instruments–will likely disappear. The clock is ticking, and with roughly $400 trillion of financial contracts using LIBOR (cumulative of all major currencies) currently outstanding, the stakes associated with this transition are high.

Working groups across regions have formed, and although many countries have already determined the planned replacement for their local interbank offering rate (IBOR), a slew of issues remain.

We believe institutions we rate will need to prepare their transition for the end of LIBOR over the next year and a half. In the Q&A included in our report S&P Global Ratings explains the dynamics of replacing LIBOR, including the operational and credit issues that may arise during the transition.

Below are some of the questions our report answers:

  • What is LIBOR, why is it going away after 2021, and and what challenges does that create for financial market players?
  • Is there any chance LIBOR will exist beyond 2021?
  • What is the trigger for LIBOR’s end?
  • How could the change from LIBOR to a new reference rate affect rated banks?
  • Which banks are most exposed to transitioning from LIBOR?
  • Will S&P Global rate debt tied to reference rates that replace LIBOR?

For further LIBOR related Q&As, read our full report here.

For more on our “LIBOR” research series visit:

To read more of our articles, visit our dedicated Financial Institutions webpage.

If you have any questions please feel free to contact me.

Kind regards,

Stuart Plesser
Senior Director
Financial Institutions Ratings

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