The IBOR Transition Digest is a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they continue to transition from LIBOR and its variants to replacement benchmark interest rates. As the market moves to the next phase of IBOR transition, it is critical to have access to comprehensive and timely resources about the market.

For additional resources and an introduction to our global cross-practice IBOR Transition Task Force, please visit Mayer Brown's IBOR Transition portal.

Thought Leadership | News and Developments | Events

THOUGHT LEADERSHIP

LIBOR Phase Out – Tax Implications in the Context of Related-Party Loans
Eye on IBOR blog, 8 June 2022
As market participants evaluate their loan portfolios and implement strategies to transition away from the London Interbank Offered Rate ("LIBOR"), they must address not only third-party loans, but related-party loans as well, in part because Treasury regulations under Internal Revenue Code Section 482 require such loan agreements to reflect an arm's length rate of interest.

IBOR Legislation and the Final Regulations
TaxQuarterly, 23 May 2022
Under the final Treasury regulations under Treas. Reg. section 1.1001-6, which generally provide broad relief from the potential U.S. federal income tax consequences of IBOR replacement for most contracts, assuming an IBOR being replaced is a rate that is a "discontinued IBOR" on the date of replacement (within the meaning of the regulations), as long as there are no payments made between the parties to a contract unrelated to IBOR replacement, a LIBOR replacement amendment is not generally considered to result in a deemed exchange for federal income tax purposes. The exceptions to the blessing of the final regulations are all focused on the parties intending to transfer value in connection with an IBOR replacement.

NEWS AND DEVELOPMENTS

United States – Syndicated and Bilateral Loans

LIBOR Transition: Lessons from Across the Ocean
Loan Syndications & Trading Association, 12 May 2022
Discussing the US term RFR approach compared to the UK compounded in arrears approach, the treatment of legacy loans (the UK has completed the transition), and the ways in which the US can complete its transition of legacy loans.

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