In the absence of robust fallbacks, there is no doubt that there will be disputes, litigation and frustration for firms on both sides of the contract when LIBOR ends. A major step towards achieving robust fallbacks was reached when ISDA's new fallback provisions and associated protocol came into effect on 25 January this year.
If a particular LIBOR was to become unavailable, these fallback provisions provide for that LIBOR to be replaced with the relevant risk-free rate plus a spread based on its past differences from LIBOR. With the LIBOR end-date announcements earlier this month, this spread has now been set for all LIBOR tenors.