Prepare now for libor transition - Vedanta's article in Property Week

LIBOR will be phased out by the end of this year and borrowers must act now to agree the transition process with their lenders and hedge counterparties. But what is the best approach when lenders’ and hedge counterparties’ transition processes are moving at different speeds.

Although some progress has been made, discussions on LIBOR transition to an alternative ‘risk-free rate’ (RFR) – currently SONIA (sterling over-night indexed average) for the UK – remain fragmented. Indeed, even within individual institutions, we have seen inconsistent messaging to customers.

By now, lenders and hedge counterparties should have contacted their customers to discuss LIBOR transition to an RFR and update existing fallback clauses (or the lack of them) in all financings and hedges that reference LIBOR. However, borrowers complain that the more information they receive about LIBOR transition, the more questions they have.

Rhona Macpherson, Senior Consultant at Vedanta Hedging, features in Property Week with her article on Libor Transition.