ISDA® Releases FAQs on IBOR Fallback Rates | Practical Law

ISDA® Releases FAQs on IBOR Fallback Rates | Practical Law

ISDA issued FAQs on IBOR fallback rates for certain derivatives agreements in connection with proposed amendments to its standard documentation.

ISDA® Releases FAQs on IBOR Fallback Rates

Practical Law Legal Update w-016-4172 (Approx. 3 pages)

ISDA® Releases FAQs on IBOR Fallback Rates

by Practical Law Finance
Published on 30 Aug 2018 • USA (National/Federal)
ISDA issued FAQs on IBOR fallback rates for certain derivatives agreements in connection with proposed amendments to its standard documentation.
On August 16, 2018, ISDA® released FAQs in connection with its issuance of the market-wide consultation on technical issues related to benchmark fallbacks (see Legal Update, ISDA Releases Consultation on Technical Issues Related to Benchmark Fallbacks).
The FAQ explains:
  • How the fallback rates and triggers for permanent cessation were determined.
  • How ISDA will select the approach for calculating "adjusted RFR" and "spread adjustment," and if that same approach will apply to all covered IBORs.
  • Why SOFR, which the US Alternative Reference Rates Committee has identified as the alternative rate for USD LIBOR, was not covered in the consultation.
  • When ISDA will launch consultations for USD LIBOR, EUR LIBOR and EURIBOR.
  • Why there is not a forward-looking term rate among the choices for calculating the adjusted RFR.
  • Why certain approaches pairing adjusted RFRs and spread adjustments were not compatible.
The FAQs also clarified that all market participants, not just ISDA members, may comment on the consultation, described intended timing for implementation of the fallbacks, and provided information about ISDA IBOR fallback webinars.
"ISDA" is a registered trademark of the International Swaps and Derivatives Association, Inc. (ISDA). ISDA is not a sponsor of Practical Law and had no part in the development of this resource.