Jurisdiction(s):
United Kingdom

Key definition

LIBOR definition

What does LIBOR mean? In legal practice, LIBOR (the London Interbank Offered Rate) is the benchmark interest rate historically used in loans, bonds and derivatives to set floating interest. It was produced daily from panel-bank submissions of estimated unsecured wholesale funding costs in the London interbank market. LIBOR is not a statutory definition; it is a descriptive benchmark term used across finance documents and regulated as a “benchmark” under the UK and EU Benchmarks Regulation. For sterling and most other currencies, panel-bank LIBOR ceased on 31 December 2021; US dollar LIBOR ceased on 30 June 2023. In the UK, the FCA temporarily required “synthetic”...

Drafting LMA market disruption clauses in LIBOR-based syndicated facilities: trigger thresholds, cost of funds calculations, mitigation, confidentiality, and issues for agents, lenders and borrowers

Published by a LexisNexis Banking & Finance expert

Practice notes

ARCHIVED: This Practice Note has been archived and is not maintained

In brief, a market disruption clause explains how loan interest is determined when a lender’s funding costs exceed the London Interbank Offered Rate (libor) or another nominated benchmark—often arising when the financial system is under strain, causing markets to seize up, or when the particular lender faces solvency issues. Either scenario is liable to increase the lender’s cost of funds. These clauses are typically found in facility agreements where interest is set by reference to a floating rate such as LIBOR or the Euro Interbank Offered Rate (euribor). This Practice Note considers market disruption provisions in the setting of LIBOR-based syndicated facilities. Similar considerations apply to syndicated facilities that calculate interest by reference to EURIBOR and other benchmark rates. The ongoing move away from LIBOR to risk‑free rates, including SONIA, will have an impact on the drafting of market disruption provisions. For further detail, see Practice Notes: LIBOR transition and Interest provisions in (LIBOR-based) Loan Market Association (LMA) documentation [Archived]...

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Web page updated on 21/05/2026

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