The sun sets on LIBOR

After more than 30 years, the London Interbank Offered Rate (LIBOR), the reference rate for hundreds of trillions of dollars across a broad array of global financial products, will sunset for new deals, as of year-end 2021. LIBOR has long been the industry’s go-to benchmark for short-term lending. While financial institutions have been preparing for LIBOR’s cessation since the introduction of LIBOR’s US alternative, the Secured Overnight Financing Rate (SOFR), in 2018, non-financial companies have been trailing in progress significantly. Whether it’s planning for the transition of existing contracts referencing LIBOR or choosing a new alternative that suits their needs for financial deals going forward, non-financial companies should have a plan in place to ensure the transition minimizes internal financial and operational impacts and to avoid widespread disruption to financial markets, products, and participants.