LIBOR transition guide now available
To help organisations such as housing associations prepare from the transition away from LIBOR (the London Interbank Offered Rate), an introductory guide has been published.
To help organisations such as housing associations prepare from the transition away from LIBOR (the London Interbank Offered Rate), an introductory guide has been published.
It is estimated around one third of borrowing by housing associations nationally in the last 30 years has been linked to LIBOR, so this change is likely to have an impact on many associations’ borrowing arrangements.
Public authorities globally have announced that LIBOR, a series of benchmark reference rates used for calculating interest rates for financial products, is no longer sustainable and the market should move to robust alternative rates.
In the UK, the Bank of England and the Financial Conduct Authority (FCA) have set out the need for this transition, and from April 2021 lenders will no longer be able to offer new loans linked to LIBOR, and any existing LIBOR based loans will need to be switched by 31 December 2021.
To help prepare for this change, a new simple introductory guide from UK Finance and the CBI, ACT, ICAEW and LMA, recommends that businesses review LIBOR mentions (in both products and accounting systems), assess the implications different rates will have, and plan on how to transition with minimum impact.
Lenders will be in touch with clients, if they haven’t already, to discuss plans for transitions so being familiar with exposure and the alternative rates will make these conversations easier.
SFHA is working with UK Finance and the other UK housing federations to ensure the sector has the necessary information on the transition.