Tough legacy: Difference between revisions
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Revision as of 14:53, 19 July 2021
Interest rates - reference rates - LIBOR transition.
In this context 'legacy' contracts are existing contracts (1) referencing LIBOR (2) that do not include fallback provisions that cater satisfactorily - or at all - for the continuation of the contract upon LIBOR being permanently discontinued.
'Tough legacy' contracts are once that both (1) contain inadequate fallbacks and (2) are impossible or very difficult to amend in advance of the end 2021 deadline for the cessation of LIBOR.
- Tough legacy contract examples
- Certain bonds (because the use of consent solicitations to transition legacy LIBOR bonds is costly, time-consuming and may require the consent of all of the bondholders).
- Certain bilateral and syndicated loans (due to the diverse nature of borrowers, questions of cost and resource availability and other challenges).
- Certain derivatives (particularly where these are used to hedge an exposure which is itself considered tough legacy or forms part of a more complex structure).
- A practical guide to LIBOR transition - Slaughter and May - September 2020, p11
