The long goodbye: How Libor ended and why the arguing hasn’t
Financial market practitioners might be forgiven for reflecting on a job well done now that the final Libor panel has ended its submissions. The journey has been immense, but the focus is turning to loose ends, including the argument that just won’t go away: is there a place for credit-sensitive rates in a post-Libor world?
On June 30, 2023, the US dollar London Interbank Offered Rate (Libor) bank panel stopped publishing its rates – or ‘settings’, as they are more properly known. The date marked the end of operations for the last remaining Libor panel.
A handful of US dollar settings – for one-, three- and six-month tenors – will continue to be calculated synthetically until September 2024 to cater for some existing contracts, after which Libor will finally be a thing of the past. Most of the US market has transitioned to rates linked to the Secured Overnight Financing Rate (Sofr), which is based on the overnight repo market for Treasuries.
Getting to this point has been a marathon. Libor settings in Swiss francs, sterling, euros and yen ended on December 31, 2021, along with one-week and two-month US dollar Libor. Other US dollar tenors continued until the June 30, 2023, deadline (and a three-month sterling synthetic Libor will run until the end of March 2024).