Beaumont Speaks to Financial and Legal Press on Current LIBOR Transition Issues
Friedman Kaplan’s LIBOR Transition Task Force head and litigation partner Anne E. Beaumont recently commented on developments in the transition away from LIBOR. Coverage of her recent insights on the transition process includes the following:
• “NY budget’s SOFR fallback proposal faces backlash,” IFLR Practice Insight, January 27, 2021 (registration/subscription required). In an article on proposed legislation included in Governor Cuomo’s proposed budget that would mandate the use of a benchmark based on the Secured Overnight Financing Rate (SOFR) for legacy contracts currently tied to LIBOR, Ms. Beaumont noted that the issue remains open as not all of the governor’s recommendations will necessarily make it into the final budget. She also commented that even if enacted, it’s possible someone will try to enjoin enforcement of the new statute. Moreover, while SOFR is currently the only rate included in the proposal, New York State has not closed the door on the inclusion of other rates.
• “Global Banks Warn of Market Chaos If Court Abolishes Libor,” Bloomberg, January 12, 2021. In this article about a lawsuit in which plaintiffs are seeking an injunction to immediately halt the use of LIBOR on antitrust grounds, Ms. Beaumont commented that it would be a catastrophe if the injunction were granted and further noted that banks are likely to continue to be sued while the LIBOR rate continues to exist.
• “Libor Proving Hard to Kill in $200 Trillion Derivatives Market,” Bloomberg, January 11, 2021. Ms. Beaumont was quoted in a Bloomberg article discussing challenges in transitioning the swaps market away from using the soon-to-be-retired LIBOR benchmark rate, commenting that slow progress in adoption of the SOFR replacement rate may have implications for financial stability due to the uncertainty it generates.
• “US Fed facility bought Libor bonds with ‘weak’ fallbacks,” Risk.net, January 7, 2021 (subscription required). Ms. Beaumont was quoted in a Risk.net article regarding a credit facility set up by the Federal Reserve in connection with COVID-19 relief measures that has purchased bonds linked to LIBOR that have weak fallback language.
• “USD Libor delay: problem solver or problem creator,” IFLR Practice Insight, December 3, 2020 (registration/subscription required). Ms. Beaumont was quoted in an article in IFLR Practice Insight regarding ICE Benchmark Administration’s decision to delay certain aspects of the USD LIBOR transition by 18 months, noting that while the intention is understandable, the delay may create confusion in how to price positions during that period.
• “Dollar Libor reprieve sparks fallback uncertainty,” Risk.net, December 1, 2020 (subscription required). In this Risk.net article discussing uncertainty stemming from an extension of the phase-out of popular U.S. dollar LIBOR settings, Ms. Beaumont noted that 18 months takes some rocks off the pile, but does not make a serious dent in the problem of tough legacy contracts that can’t be transitioned to alternative rates.
• “Libor’s Final Retirement Date May Get Delayed Until Mid-2023,” Bloomberg, November 30, 2020. Ms. Beaumont commented on the potential 18-month extension in retiring certain USD LIBOR rates, noting that the move is pragmatic and demonstrates that while those overseeing dollar LIBOR want to discourage use of the soon-to-be-retired rate, they also don’t want to blow up the financial system by being too doctrinaire.
Friedman Kaplan’s LIBOR Transition Task Force is actively following developments in the expected cessation of the LIBOR benchmark and issues surrounding its phase-out.