The New York State Senate and Assembly passed concurrent LIBOR legislation on March 24, 2021.  This legislation is a major step forward in the LIBOR Transition process, as it affords the ability to include recommended fallback language in contracts that reference US Dollar LIBOR and are silent as to an alternative reference rate.  This legislation could affect as much as $2 trillion in contracts that reference US Dollar LIBOR and mature after June 30, 2023.  The bill is expected to be signed by the New York Governor. 

Please see the press release issued by the Alternative Reference Rates Committee (ARRC) here.

"The SOFR Symposium: The Final Year," was hosted by the ARRC on Monday, March 22, 2021. A replay is available here. On March 23, 2021, the ARRC issued a press release, “ARRC Provides Update on Forward-Looking SOFR Term Rate.” The press release in its entirety is available here.

The press release further elaborates on the ARRC’s inability to create a recommendation for an alternative term reference rate (SOFR term rate).  This is due to the lack of market liquidity in the underlying SOFR derivatives markets.  As you may be aware, the ARRC’s published timeline included the recommendation of an alternative term reference rate prior to the end of 2021.  Throughout the process of LIBOR transition, the ARRC’s position has not waivered with regard to the lack of need for a term reference rate.  This is in contrast to some market participants that are looking for a term alternative reference rate curve to be established.  As per the press release, even if a term SOFR were to be published it would only be recommended for very limited usage.

The FHLB continues to monitor market liquidity in a variety of non-LIBOR derivatives as part of its LIBOR Transition plan.  The FHLB does not believe that the lack of a term SOFR will impede the market or the FHLB’s LIBOR transition.