An important step for GBP loans

Today is a milestone for GBP loans. The Pound Sterling Risk-Free Reference Rate Task Force (the “Task Force”) previously recommended that market participants stop using GBP LIBOR in new loans, bonds, securitizations and linear derivatives that expire after the end of 2021 before March 31, 2021. On March 26, 2021, the Financial Conduct Authority (the “FCA”), in its letter “Dear CEO” of March 26, 2021, stated that it expected this that all companies meet task force milestones. In particular, the FCA added that:

  • They do not expect any additional sterling LIBOR loans, bonds, securitizations or linear derivatives to be underwritten from Thursday April 1, 2021 by companies and groups regulated by the PRA and FCA, unless expressly authorized. in the milestones of the working group;
  • Any loan, bond or securitization issue referring to LIBOR in pounds sterling from Thursday April 1, 2021 that expires beyond the end of 2021 would potentially be viewed as a sign of poor asset management. risks and poor governance of the transition; and
  • The leader (s) of new syndicated loans should take the lead in ensuring that all union pledges made after Thursday April 1, 2021 do not refer to sterling LIBOR.

It’s time to review your preparations to reach this important milestone.

We expect all companies to meet the objectives of the Sterling Risk Free Reference Rate Working Group (RFRWG) 3 and the objectives of other relevant working groups and supervisors, as appropriate.

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