Discontinuation of London Interbank Offered Rate
PFI Guidance Note on the discontinuation of London Interbank Offered Rate (LIBOR).
Documents
Details
The purpose of this note is to make procuring authorities aware of a forthcoming change in the UK finance markets resulting from the discontinuation of LIBOR (London Interbank Offered Rate) that will impact the vast majority of PFI projects. It also makes procuring authorities aware of a possible PFI market consultation exercise to occur in the first half of 2021.
In the UK, LIBOR is expected to cease to exist after the end of 2021, as required by the Bank of England and the Financial Conduct Authority. In PFIs LIBOR is often used as the base cost of private sector debt finance that is loaned by banks to PFI Special Purpose Vehicles (SPVs).
PFI private sector investors and their finances will need to determine the most appropriate alternative benchmark interest rates for PFIs. Procuring authorities should not mandate or direct any particular course of action to the SPV. However, procuring authorities should be aware of this issues in case they are contacted by their SPV in respect of LIBOR discontinuation.
This guidance is published under the PFI Centre of Excellence.
Updates to this page
Published 8 February 2021Last updated 28 July 2022 + show all updates
-
Addition of July 2022 update
-
Addition of October 2021 guidance
-
Update in relation to Discontinuation of LIBOR applied to PFI
-
First published.