Transitioning from LIBOR to SOFR
The London Interbank Offered Rate (LIBOR) is currently the world’s most widely used benchmark for short-term interest rates with more than $200 trillion of LIBOR-linked financial instruments in the United States alone. Plans are underway to phase LIBOR out of the financial markets by the end of 2021.
In 2014, the Federal Reserve convened the Alternative Reference Rate Committee to identify a replacement for LIBOR. In 2018, the Federal Reserve began publishing the Secured Overnight Financing Rate (SOFR) as its recommended alternative. Unlike LIBOR, SOFR is calculated based on a broad measure of U.S. Treasury overnight government repo rates.
The FHLBank System is one of the leading issuers of LIBOR-linked securities and is committed to a successful transition to SOFR. From Nov. 2018 to August 2019, the System’s Office of Finance has issued over $100 billion in SOFR-linked securities.
We have created this page to help ensure that our members are prepared for the transition and the possible changes in operations, financial management strategy or product offerings as a result of the phase out.