USD LIBOR joins the “on borrowed time” club

Following the administrator’s announcement on 18 November that it would consult on its intention to cease publication of all GBP, EUR, CHF
and JPY LIBOR tenors on 31 December 2021; there was ill-founded speculation that USD LIBOR would somehow be reprieved. ICE Benchmark Administration (IBA) have today announced “will consult on its intention to cease the publication of the one week and two month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021, and the remaining USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.” USD LIBOR will join the consultation, which will begin in early December and is expected to be be complete by late January 2021. IBA states no reason for staggering the USD LIBOR cliff edge, low SOFR liquidity is most likely, but notes that ” any publication of the overnight and one, three, six and 12 month USD LIBOR settings based on panel bank submissions beyond December 31, 2021 will need to comply with applicable regulations, including as to representativeness.” The FCA and the Federal Reserve Board have issued statements welcoming the announcement.

Once again, the consultation will not and is not intended to act as an Index Cessation Event for the purposes of the Supplement and Protocol; however, the funeral music is getting louder.

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