.jpg)
The long‑awaited announcement regarding the transition from the Johannesburg Interbank Average Rate (“JIBAR”) to the South African Rand Overnight Index Average (“ZARONIA”) has now been made. On 3 December 2025, the South African Reserve Bank (“SARB”) confirmed that JIBAR will be discontinued immediately after its final publication on 31 December 2026 (the “JIBAR Cessation Date”). This step aligns South Africa with comparable global transitions (i.e. the cessation of the London Interbank Offered Rate), with ZARONIA set to establish a more robust interest rate benchmark for the pricing of financial instruments denominated in South African Rand.
The SARB has placed the rationale for JIBAR’s cessation firmly on the record. Structural weaknesses in the benchmark and the sustained decline in activity in the underlying market have been identified as vulnerabilities that cannot be addressed within a reasonable timeframe. ZARONIA, calculated from actual unsecured overnight deposit transactions, has been endorsed as the successor rate and is already being adopted across derivatives and cash products. The policy direction is therefore clear: (i) reduce reliance on JIBAR; and (ii) build liquidity and operational readiness around ZARONIA.
Although the JIBAR Cessation Date is now fixed, the market must transition earlier for new business. Consistent with the Market Practitioners Group (“MPG”) milestones, debt providers should not write new JIBAR‑linked cash instruments after March 2026. From that point, new loans, bonds and money-market instruments should reference ZARONIA from inception. Market participants should therefore treat the end of March 2026 as the practical deadline for ceasing new JIBAR contracts and should incorporate robust fallbacks and hardwired rate-switch provisions in all outstanding and near-term issuances to manage the period up to cessation.
Amendments to the Financial Sector Regulation Act, 2017 have been proposed to provide a targeted legal backstop for the transition. In practice, however, issuers and lenders should not rely on legislation to resolve transition risk. Negotiated amendments, consent processes and hardwired fallbacks remain the primary route for the vast majority of contracts.
The MPG and SARB are also progressing a Term ZARONIA. On 20 October 2025, SARB issued a request for proposals for a Term ZARONIA benchmark administrator, with the aim of publishing forward-looking Term ZARONIA by April 2026. Authorities continue to emphasise that ZARONIA compounded-in-arrears is appropriate and operationally achievable for most products. If and when Term ZARONIA becomes available, its expected role will be limited to use cases that genuinely require forward‑looking payment certainty or face operational constraints.
Importantly, the SARB announcement also locks in the credit adjustment spread (“CAS”) as at 3 December 2025. The CAS is intended to preserve economic equivalence when legacy JIBAR contracts convert to compounded-in-arrears ZARONIA. For new ZARONIA-based originations, pricing should typically be calibrated through the margin rather than by importing a legacy spread.
With the JIBAR Cessation Date now set and the “no new JIBAR” milestone imminent, the immediate priority is execution. This means mapping exposures, agreeing and documenting hardwired rate-switch mechanics that reference ZARONIA compounded in arrears, and setting clear triggers and backstop switch dates that precede cessation.
We are working across the various workstreams and stand ready to assist clients in completing the transition. We are able to run a portfolio‑wide exposure and documentation review across JIBAR‑linked facilities and notes, identify consent thresholds and stakeholder approvals, and prepare the necessary transition amendments or rate‑switch agreements at scale.
--
Read the original publication at ENS
