How to Prepare for the Libor Transition
The London Interbank Offered Rate (LIBOR) is expected to lose its status as the global interest rate benchmark on January 1, 2022.
The London Interbank Offered Rate (LIBOR) is expected to lose its status as the global interest rate benchmark on January 1, 2022.
When you are planning for your financing needs, it is important to note that the London Interbank Offered Rate (LIBOR) is expected to lose its status as the global interest rate benchmark on January 1, 2022. LIBOR is a rate of interest that one bank charges another on an unsecured basis and is commonly used for commercial real estate borrowing and lending.
After the change, banks will no longer be able to enter new LIBOR transactions, though some rates and existing contracts will be honored until mid-2023. LIBOR will be replaced by a variety of alternative reference rates (ARRs). In the US, regulators prefer Secured Overnight Financing Rate (SOFR), a metric based on overnight market transactions. There also are alternative rates being offered in the US, such as Ameribor and the Bloomberg Short Term Bank Yield (BSBY).
Below are steps businesses can take to prepare for the LIBOR transition:
An experienced team of bankers can help you navigate these complex financial changes so you can focus on growing your investments.
