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IFC's LIBOR Transition

LIBOR–the London Interbank Offered Rate–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.

In 2014, following developments in the global markets that revealed weaknesses in LIBOR’s sustainability as a reference rate, the U.S. Federal Reserve commissioned the Alternative Reference Rate Committee (ARRC) to recommend a benchmark interest rate that would replace USD LIBOR, or the short-term reference rate for dollar-denominated debt. In 2017, the ARRC selected SOFR as its preferred alternative to US LIBOR, representing best practice for use in certain new USD derivatives and other financial contracts.

On July 27, 2017, Andrew Bailey, chief executive of the UK's Financial Conduct Authority (FCA), announced that market participants should not rely on LIBOR being available after 2021.

On March 5, 2021, the United Kingdom’s Financial Conduct Authority (FCA) announced dates on which panel bank submissions for all LIBOR settings will cease and after which representative LIBOR rates will no longer be available:

  • December 31, 2021: one-week and two-month USD settings and all non-USD settings
  • June 30, 2023: all other USD settings

July 29, 2021, the ARRC formally recommended the forward Term SOFR published by CME Group, Inc. (CME) for use in business loans.

IFC’s Transition from LIBOR

IFC has conducted a comprehensive analysis of the impact of the transition on our corporation from a lending, funding, accounting, operations, information technology, and legal perspective.,

IFC is monitoring market developments and working toward a smooth transition to SOFR as our successor benchmark rate. IFC is also 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 mechanisms for transitioning bilateral and multilateral transactions.

If you have any questions, please contact IFC at libor_transition@ifc.org.

For the latest information on market guidance and the transition process, please visit these websites:

Alternative Reference Rates Committee

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.

International Swaps and Derivatives Association

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.

Last Updated: October 20, 2021