LIBOR Transition Knowledge Center

When Will the Transition from LIBOR Occur?

The global transition away from legacy LIBOR short-term financing rates is a massive undertaking for the financial industry. Regulators, market participants, exchanges and clearing functions all share a consistent set of priorities: the avoidance of market disruption, liquidity “gaps” and the degradation of legal or contractual terms.

On March 5, 2021, the United Kingdom’s Financial Conduct Authority (FCA) formally announced the timing of future cessation and loss of representativeness of the LIBOR benchmarks. A key aspect of this announcement was that 1-, 3-, 6- and 12-month USD LIBOR benchmarks will continue to be published until June 30, 2023. Non-USD LIBOR, along with 1-week and 2-month USD LIBOR, will be discontinued on December 31, 2021.

While USD LIBOR has been granted an 18-month extension to better support the transition of legacy product, U.S. regulators have warned of safety and soundness risks for any new issuance of USD LIBOR beyond 2021. Accordingly, the Alternative Reference Rate Committee (ARRC) continues to expect that the financial system will complete its readiness to transition from USD LIBOR to an alternative floating rate index by the end of 2021.

This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change.

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