On December 21, the Working Group on Sterling Risk-Free Reference Rates published a paper aiming to help market participants prepare in advance of 2021, when LIBOR may not be available. The paper considers new and legacy loan transactions that reference LIBOR and highlights possible issues should it be replaced, and also the impacts a LIBOR replacement could have on the regulatory obligations of market participants. The paper also considers the possibility that LIBOR might continue to be published but based on a different methodology.

The paper suggests steps which can be taken to mitigate issues, including:

• Referencing alternative benchmarks.
• Increasing transparency (for example, by adding disclaimers and raising awareness with counterparties).
• Including alternative fallbacks in documents, specifically to address the discontinuation of LIBOR.
• Amending terms of loans to make future amendments easier.
• Considering the wider impact, where a loan is part of a larger transaction.

A link to the paper can be found here.