The aviation industry continues to use LIBOR for aircraft financing, operating leases and related hedging products, adding to the number of legacy contracts linked to the outgoing reference rate, according to Clifford Chance. The FCA's December 2021 deadline for LIBOR discontinuation is approaching but the "legacy book" of aircraft loans and leases which use LIBOR for rental and other payment provisions continues to grow. The law firm said it would be prudent for the industry to assume a divergence in the alternative reference rates used in different contracts and take action to avoid mismatches between lease cash flows and related loan and swap payments. “While we believe that there is no need to change our current practice with respect to the rate at which interest payments are made on loans or leases, if this trend continues, then we will have
The aviation industry continues to use LIBOR for aircraft financing, operating leases and related hedging products, adding to the number of legacy contracts linked to the outgoing reference rate, according to Clifford Chance. The law firm said it would be prudent for the industry to assume a divergence in the alternative reference rates used in different contracts and take action to avoid mismatches between lease cash flows and related loan and swap payments. “While we believe that there is no need to change our current practice with respect to the rate at which interest payments are made on loans or leases, if this trend continues, then we will have