Today the Bank of England RFR WG made a further statement on the impact of COVID-19. The full statement is here can be found here. As mentioned in our previous blog the clear message from the BoE is to keep calm and transition on with the following recommendations :
By the end of Q3 2020 lenders should be in a position to offer non-LIBOR linked products to their customers;
After the end of Q3 2020 lenders, working with their borrowers should include clear contractual arrangements in all new and re-financed LIBOR-referencing loan products to facilitate conversion ahead of end-2021, through pre-agreed conversion terms or an agreed process for renegotiation, to SONIA or other alternatives; and
All new issuance of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of Q1 2021
Dantum notes that the Q1 2021 deadline has not changed and although the Q3 2020 deadline is now aligned to Q1, their statement gives more detail on what to do from Q3. The focus of the BoE is to be able to offer RFR products and where LIBOR products are offered to include a clear contractual arrangement to convert before end 2021.