LIBOR (London Inter-Bank Offered Rate) has been the most widely used interest rate benchmark worldwide and played a central role in the global financial system for decades. LIBOR rates represented the average rate at which a panel of banks could obtain wholesale unsecured funding, but due to concerns regarding its integrity, credibility, and vulnerability to manipulation, regulators determined that it was no longer a representative benchmark rate and should not be used going forward. As a result, in 2017, global regulatory bodies embarked on a global IBOR reform effort and developed a phased transition approach from LIBOR to alternative reference rates for all currencies and tenors.
At the IDB, we have proactively and strategically prepared the bank and our member countries to navigate this significant market-wide transition. The majority of the Bank's financial instruments, including loans, debt, investments, and derivatives, were tied to US dollar LIBOR. To comply with regulatory requirements, the IDB transitioned all its financial products to the Secured Overnight Financing Rate (SOFR), the rate selected as the replacement for LIBOR in US dollar-based instruments. The final cessation date for US dollar LIBOR tenors was June 30, 2023.
This web page serves as a central location for information on LIBOR transition generally, as well as specific information on IDB’s transition from LIBOR to SOFR. Key resources and links are below.