Replacing LIBOR – Are you Thinking About This $200 Trillion Dollar Problem With Your Contracts?

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Darren Gold, VP at UnitedLex Corp., wrote an interesting article about the London Interbank Offer Rate (LIBOR) which is used all over the world as the reference for a great number of loan contracts.  The UK’s Financial Conduct Authority recently declared that it would no longer require banks to submit the data that enabled LIBOR to be calculated after the beginning of 2021.

Although there will be alternatives such as Secured Overnight Financing Rate (SOFR) in the USA and Sterling Overnight Index Average (SONIA) in the UK, this change does come with significant uncertainty and we must wonder what this will mean for current contracts and how they will be dealt with in the future.

Replacing LIBOR – Are you Thinking About This $200 Trillion Dollar Problem With Your Contracts?