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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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