November 29, 2023 - Bloomberg Index Services Limited (BISL) has announced the future cessation of the publication of the Bloomberg Short-Term Bank Yield Index (BSBY). As we have previously covered, BISL launched a consultation on a proposal to cease publication of BSBY in September with the comment period ending October 13th. Just one month later, BISL has confirmed its intention to cease publication of BSBY as a benchmark. BISL noted in the consultation that the reason for proposing the cessation of BSBY was made “following a review of commercial opportunities for BSBY” which revealed that “BSBY’s usage within financial products is limited and unlikely to see significant growth.” As a reminder, before the availability of Term SOFR, BSBY, a term rate, was considered as a potential benchmark replacement for LIBOR. However, since then Term SOFR has become the leading benchmark replacement in lending markets.
What to know?
- BSBY will cease to be published after the Friday, November 15, 2024 publication of each BSBY tenor
- BISL will not be recommending a fallback replacement rate for BSBY
- Users of BSBY must review their impacted agreements to understand the relevant fallback language and identify what steps need to be taken in the next year