Assessing bank readiness for the Libor transition
WATCH ON DEMAND: Original broadcast date - 20 May 2021. The end of Libor has been in preparation since 2017, in the wake of well-publicised scandals over how it was set. As the deadline for its replacement approaches, how ready is the project finance market?
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Key topics covered:
- The readiness of the project finance market for the shift to risk-free rates
- Overlooked issues with the end of Libor
- The process of reviewing loan documentation for legacy Libor transactions
- Whether or not term RFRs will be important for infrastructure development
- The impact of the Libor transition on the swaps market for infrastructure borrowers
- Remaining hurdles for banks as part of Libor’s retirement
- The consequences of the extension to some US-dollar Libor maturities
Libor is meant to be a thing of the past by the start of 2022, but the challenges of replacing it are immense, not least given the trillions of dollars in debt agreements that reference it. Banks and their advisers have had to review existing documentation, make sure replacement rates accurately reflect funding costs, and make sure models capture the dynamics of using overnight rates.
Sponsors will be watching developments intently, given how important bank funding is to the market, and the importance of access to stable long-term funding. But will it be impossible to avoid turmoil in both loan books and originating new business from next year?
Joining Proximo's moderator Tom Hopkins for our Libor webinar are:
Jeremy Hushon, partner, Norton Rose Fulbright
Max Pollock, executive director, Natixis
Mark Dennison, partner, Eversheds Sutherland
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Libor going - but still many questions to answer What major adjustments does the project finance sector face as it shifts to life under RFRs?