LIBOR Transition

When setting interest rates, TD Bank will switch from LIBOR to other industry benchmarks.
For the latest updates click here.

Background

For many years, TD Bank and financial institutions around the world used the London Interbank Offered Rate (LIBOR) as a benchmark for setting interest rates. However, LIBOR has ceased to be a reliable rate and is being replaced with alternative reference rates (ARRs).

The change was set in motion by the 2008 financial crisis which revealed LIBOR's lack of transparency and vulnerability to manipulation. Over time, however, as the number of transactions has decreased, it relied more heavily on subjective judgment.

In addition, they are extending the publication of remaining USD LIBOR tenors until June 30, 2023 to allow legacy contracts to mature or be renewed on an ARR before LIBOR ceases to be published.

More information is available at ICE LIBOR® Feedback Statement on Consultation on Potential Cessation.

Industry groups like the Federal Reserve Bank of New York's Alternative Reference Rates Committee (ARRC) and the International Swaps and Derivatives Association (ISDA) have been working to identify new reference rates based on observable transactions that represent actual market activity. The ARRC recommended the Secured Overnight Finance Rate (SOFR ) as an index to replace LIBOR in loans and other financial instruments.

Private industry providers have begun publishing other ARRs in addition to SOFR, including the credit sensitive rate such as the Bloomberg Short-Term Bank Yield index (BSBY) and Ameribor published by the American Financial Exchange.

Regulators will not require the use of any particular ARRs but are encouraging market participants to opt for robust, transparent alternatives to LIBOR.

TD Bank is currently offering SOFR-priced products and continues to evaluate credit sensitive ARRs for future use on a product-by-product basis.

Making the switch from LIBOR – TD adopts SOFI First strategy

TD adopts SOFR First strategy

TD will no longer issue new LIBOR products effective November 1, 2021. After this date, all new deals and most renewals will be priced using an ARR.

TD selected the SOFR as the primary ARR for use in existing contracts priced at USD LIBOR.

Because SOFR is a nearly risk-free index based on transactions secured by US treasuries, it has historically been a lower rate than USD LIBOR, which is unsecured and is sensitive to market credit stress. The 5 year average historical difference between USD LIBOR and SOFR is approximately 11.5 bps and may change over time. Market SOFR pricing is anticipated to include margins that reflect historic differences with LIBOR.

The Bank is closely watching the ARR markets and plans to roll out ARRs in addition to SOFR as markets and operational capabilities evolve to support them.

A seamless shift

If you have a LIBOR-based product, including an adjustable rate mortgage, commercial loan, line of credit, etc., we’ll work with you to transition to new ARRs. You don’t have to take any action today. We’ll keep you informed as we continue toward the change.

To provide our Customers with a smooth transition from LIBOR, we established a company-wide initiative several years ago focused on:

  1. Participating in industry groups exploring new benchmark rates

  2. Choosing the best ARRs for each TD product

  3. Improving systems and other infrastructure to prepare for the switch

  4. Communicating with you about upcoming changes

  5. Amending LIBOR contracts with updated fallback to assist in the transition

    • "Fallback" refers to contract provisions that permit replacement of LIBOR with an ARR within a designated time frame
  6. Creating efficient processes for updating existing products

Please keep checking this page for updated information or reach out to your TD representative.

Statement differences

Your ARR loan will be converting to an industry leading platform so that we can provide you with enhanced servicing. As a result, you will receive a new loan number and a revised statement layout.

Your statement will have a new look and feel.

  1. If you have multiple loans with the same due date in the same facility, you'll receive one consolidated statement

  2. If your loan includes escrow payments, you'll now see these listed in the "Other" section

  3. Past due amounts, if applicable, will show on your monthly statement

  4. See a statement comparison (PDF)