IBORs and other Benchmarks
PREPARING FOR THE TRANSITION FROM IBOR TO RISK FREE RATES
Financial Markets are faced with one of the most significant transformation projects in recent history – the change from current reference benchmark interest rates (IBOR(s)) to Risk Free Rates (RFR). This transition will have a significant impact on financial agreements using floating Interest Rates and may require comprehensive reviews and preparation to ensure the transition is managed smoothly.
Parties entering into market transactions (such as OTC derivative transactions and securities financing transactions) that use certain indices and interest rates as benchmarks are exposed to the risk that such benchmarks (i) may be subject to methodological or other changes which could affect their value, (ii) may not comply with applicable laws and regulations (such as the European Benchmark Regulation) and/or (iii) may be permanently discontinued.
Societe Generale and its experts are here to help and work with clients to anticipate the impact on their organizations and guide them through this transition.
The occurrence of any of the aforementioned risks may have adverse consequences which may materially impact the economics of the relevant market transactions. You should conduct your own independent investigation and analysis of the potential consequences of any relevant risks such as those mentioned above, particularly in light of the ongoing industry initiatives related to the development of alternative reference rates and the update of the relevant market standard documentation.