Why is LIBOR being replaced?

LIBOR is being replaced because the IBA, LIBOR’s administrator, won’t have access to input data necessary to calculate the rate’s settings on a representative basis beyond the above-mentioned cessation dates.

What will replace LIBOR?

Synovus has other options such as Prime and Treasury rates which may be fitting alternatives for LIBOR depending on the situation. Additionally, the Federal Reserve Board and the Federal Reserve Bank of New York formed the Alternative Reference Rates Commission (ARRC) in 2014 to identify an alternative reference rate to replace USD LIBOR. In 2017, the agency identified the Secured Overnight Financing Rate (SOFR) as a recommended alternative. Like LIBOR, SOFR is a benchmark interest rate for dollar-denominated derivatives and loans.

SOFR is a broad measure of the cost of borrowing cash overnight, collateralized by U.S. Treasury securities. SOFR includes all trades in the Broad General Collateral Rate, plus bilateral Treasury repurchase agreement (repo) transactions cleared through the Delivery-versus-Payment (DVP) service offered by the Fixed Income Clearing Corporation (FICC), which is filtered to remove a portion of transactions considered “specials.”2

What happens if I have an existing LIBOR-based loan with Synovus?

Synovus will be able to offer new loans tied to SOFR beginning third quarter 2021. If you have a loan or obligation tied to LIBOR that matures after the LIBOR cessation date,3 a Synovus Relationship Manager will contact you to discuss the successor rate when there is greater clarity as to successor indices. Synovus is committed to making this migration as seamless as possible for our customers and will communicate additional details as they become available.

For more information about the LIBOR transition, visit the Alternate Reference Rates Committee website.

What you need to know about SOFR

The Alternative Reference Rates Commission (ARRC), formed by the Federal Reserve Board and the Federal Reserve Bank of New York, identified the Secured Overnight Financing Rate (SOFR) as an alternative reference rate to replace LIBOR. Learn more

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here and take no liability for your use of this information.

  1. There may be changes to the LIBOR transition timeframe set forth above and, as a result, the information presented herein is subject to change without additional notice. Back
  2. Financial Conduct Authority, “Announcements on the End of LIBOR,” May 3, 2021 Back
  3. Ibid Back