LIBOR is the most widely used interest rate benchmark to price or value a wide range of financial products, including corporate and personal loans, mortgages, bonds, securitizations and derivatives, underlying over $370 trillion of transactions across the globe.
Last year, following changes in global markets that revealed weaknesses in LIBOR’s sustainability as a reference rate, global regulators and market participants began a process of phasing out the use of LIBOR across all currencies and tenors and identifying an adequate alternative benchmark rate. This transition process—which is expected to be concluded by the end of 2021—is continuously evolving and represents a significant change that will impact all participants in financial and capital markets globally.
IFC has conducted a comprehensive analysis of the impact of the transition from a lending, funding, accounting, operations, information technology and legal perspective, on IFC’s portfolio of existing loans and capital mobilization programs.
IFC is monitoring market developments and working toward a smooth transition to a successor benchmark rate. IFC is collaborating with partners in the financial industry—particularly with Multilateral Development Banks and other Development Finance Institutions—to track industry developments and develop best practices, including fallback language for bilateral and multilateral transactions.
If you have any questions, please contact IFC at firstname.lastname@example.org. For further reference, please read an article written by IFC Head of Investor Relations, Denise Odaro in the International Debt Capital Markets Handbook 2020 publication, viewable at this link.
For U.S. dollar markets, efforts toward determining an alternative benchmark rate are being led by the Alternative Reference Rates Committee, which includes private market participants convened by the Federal Reserve Board and the Federal Reserve Bank of New York.
The transition in the derivatives market is being led by the International Swaps and Derivatives Association, which the Financial Stability Board tasked to remediate the relevant provisions in the derivatives contacts.