U.S. FEDERAL LIBOR LEGISLATION
The U.S. has passed federal legislation providing for a mechanism to shift contracts linked to Libor to new indexes when no other procedure is available. The legislation focuses on "tough legacy" contracts (i.e. contracts that do not specify a replacement for LIBOR or contain an adequate LIBOR replacement mechanism). The legislation provides for a LIBOR-replacement (SOFR) for these contracts. There are also various safe harbor provisions including for eligible persons who implement contract "conforming changes" that are necessary to effectuate the transition away from LIBOR.
In Canada, industry consultations are currently underway on the future of the Canadian Dollar Offered Rate (“CDOR”). Given the widespread use of CDOR in Canada any potential cessation of CDOR will entail transitional considerations. The IIAC’s Debt Markets Committee is continually monitoring and assessing the implications from potential changes to CDOR.
For more information contact Jack Rando.