Worldwide transition away from LIBOR

Making the transition away from LIBOR as a global benchmark interest rate

After decades of serving as one of the world’s most popular benchmark interest rates, LIBOR will soon be unavailable. LIBOR has been used frequently in a wide range of financial products, such as business loans and adjustable-rate mortgages. However, a world-wide transition is underway to replace it.

LIBOR will be replaced with rate alternatives, such as the Secured Overnight Financing Rate (SOFR). Regulators have made clear LIBOR should not be used in new contracts after 2021. The transition may also impact some existing contracts that use LIBOR as a benchmark rate.

U.S. Bank has planned extensively for this transition in recent years, and we are well-positioned to facilitate a smooth transition for our customers. We offer a variety of rate alternatives and on April 1, 2021, we became operationally ready to offer SOFR for most commercial loans.

One of our top priorities is keeping you informed. We encourage you to review the information on this page, as well as the external resources provided. If you would like more information, contact your primary U.S. Bank point of contact or visit our customer service page to contact us by the method most convenient for you. We also encourage you to seek independent professional advice on any questions or concerns you may have on this transition.

Regulatory updates

The Adjustable Interest Rate (LIBOR) Act
U.S. Federal Legislative Solution for Transitioning “Tough” Legacy Contracts

March 15, 2022

On March 15, President Biden signed a congressional 2022 omnibus spending bill that included legislation to transition tough legacy LIBOR contracts in the U.S.

The Adjustable Interest Rate (LIBOR) Act establishes a process for replacing LIBOR with a clearly defined replacement benchmark in existing contracts that (a) do not have fallback language, (b) have fallback language that falls back to a rate that is based on LIBOR, or (c) require a party to determine a replacement rate that takes LIBOR into consideration. This replacement benchmark rate will be selected by the Board of Governors of the Federal Reserve System ("the Board") through a rule-making process by September 2022.

The selected rate is required to be a SOFR-based rate with a spread adjustment and may vary across products. It is expected that the Board will provide a comment period on the proposed rules before they become effective.

Frequently asked questions

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This discussion is intended to be informational only and is not exhaustive or conclusive. It is not intended to serve as a recommendation or solicitation for the purchase or sale of any particular product or service. It does not constitute advice and is issued without regard to any particular objective or the financial situation of any particular individual. Some of the information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Other information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or a guarantee of future results. U.S. Bank and its representatives do not provide tax, accounting or legal advice. Each individual's financial situation is unique. You should consult your tax, accounting and/or legal advisor for advice and information concerning your particular situation.

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