According to Britain’s Financial Conduct Authority, the London Interbank Offered Rate, or LIBOR, will be phased out and abandoned by the end of 2021.  This phase out will put lenders and borrowers in a tricky situation as LIBOR is the most commonly used interest rate index and is estimated to be tied to over $350 trillion of financial products globally, including commercial mortgages, corporate loans and swap transactions.  LIBOR is calculated daily and aims to provide the average interest rate at which the 10 to 20 contributing banks may obtain loans from each other.  Over the past ten years, LIBOR has been highly susceptible to rigging scandals and market manipulation since the calculation is often not underpinned by actual market transactions, leading to its eventual abandonment.
Continue Reading The End of LIBOR: What’s Next for Lenders and Borrowers?