The Working Group on RFRWG Issues Statement on the Impact of COVID-19 on the Timeline for Firms’ LIBOR Transition Plans

On March 25, 2020, the FCA, Bank of England and members of the Working Group on Sterling Risk-Free Reference Rates (RFRWG) issued a joint statement that highlighted the unchanged central assumption that firms cannot rely on LIBOR being published after the end of 2021 due to the Coronavirus pandemic.

A further statement from the RFRWG was published on April 29, 2020, detailing how firms’ LIBOR transition plans are progressing and how Coronavirus may have impacted those plans during the period. The statement outlined that progress had continued during this difficult period noting the following progress:

• The First syndicated loan that will link to SONIA and SOFR;
• The first bilateral loan referencing SONIA in the social housing sector; and
• A further successful consent solicitation to convert a legacy LIBOR referencing bond.

The RFRWG, the FCA and the Bank of England did recognise that it will not be feasible to complete the transition away from LIBOR across all new sterling LIBOR linked loans by the original end of Q3 2020 target. They considered that there will likely be the continued use of LIBOR-referencing loan products into Q4 2020 and noted the importance of maintaining the smooth flow of credit to the real economy.

The RFRWG also gave an overview of its workplan to continue the momentum on LIBOR transition.

The Statement was updated on May 13, 2020 to confirm that the PRA and FCA had decided to resume full supervisory engagement from June 1, 2020. This was after suspending transition data reporting at the end of Q1 for dual regulated firms and cancelling some Q1 firm meetings.