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What You Need to Know About LIBOR Transition to SOFR

What you need to know

On July 29th 2021, the Alternative Reference Rates Committee (ARRC) announced that it is formally recommending the CME Group's forward-looking Secured Overnight Financing Rate term rates (TERM SOFR) as the index to replace the sunsetting LIBOR (London Interbank Offered Rate). These rates are officially published on the CME website. WaFd Bank launched TERM SOFR loan products on January 1, 2022. Similar to LIBOR, TERM SOFR is available to WaFd Bank borrowers.

What is the Alternative Reference Rates Committee (ARRC)?
A group of market participants organized by the Federal Reserve and New York Fed to help ensure a successful transition from Libor to a more robust reference rate.

Objectives of ARRC:

  • Identify alternative reference rates and determine whether identified alternative rates are compliant with the IOSCO's Principals for Financial Benchmarks.
  • Identify best practices for contract robustness to ensure contracts are resilient to the possible cessation or material alteration of existing of new benchmarks.
  • Develop an adoption plan to outline the necessary steps so that market participants could make the adoption more successful.
  • Create a timeline and an implementation plan with metrics of success.


October 23
ISDA publishes updated protocol


January 25
ISDA Protocol Amendments and updated 2006 ISDA Definitions with fallbacks became effective

June 30
Cessation of remaining Libor Tenors

July 29
ARRC recommends a forward-thinking Term SOFR reference Rate

December 31
Cessation of week 1 & 2 month LIBOR, final deadline for LIBOR Originations


June 30
Cessation of remaining LIBOR Loans

July 1
Term SOFR Replacement Index In Use


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