Module III· DCM — Investment Grade & Senior DebtIntermediate
Question

What was the LIBOR / SOFR / €STR transition, and how does it affect existing bonds and loans?

Answer

LIBOR was phased out and replaced by alternative risk-free rates such as SOFR for USD and €STR for EUR. Existing floating-rate loans and bonds needed fallback language, amendments, or benchmark replacement mechanics. The transition affects interest calculations, spread adjustments, systems, hedge alignment, and legal documentation.