On July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop compelling banks to submit London interbank offered rates (LIBOR) by the end of 2021. The New York Fed has started publishing the Secured Overnight Financing Rate (SOFR), a new reference rate based on overnight loans collateralized by U.S. Treasuries. SOFR is the anticipated replacement for the LIBOR index.
What do you need to know to be prepared for January 1, 2022? The Alternative Reference Rates Committee, in partnership with GFOA, published a two-page guide to for municipal issuers. The purpose of the document is to give the reader a basic understanding of the LIBOR/SOFR transition and rationale as well as general considerations for municipal issuers over the next few years.
As an appointee to the Alternative Reference Rates Committee, GFOA will continue providing content to help educate the issuer community as the transition approaches.