Change of benchmark rates from WIBOR to WIRF in credit agreements
In the coming years, the Polish financial market will face a major change: replacement of WIBOR (the Warsaw Interbank Offered Rate) with a new benchmark, WIRF (the Warsaw Interbank Reference Rate), which is eventually to be named POLSTR (the Polish Short-Term Rate). The change of the benchmark is part of a broader global reform aimed at replacing IBOR-type benchmarks.
Change of benchmark
So far, WIBOR has been used as a benchmark for most credit in Poland issued in zlotys. The methodology for applying it is based on data for transactions concluded on the interbank market, or, in their absence, binding deposit offers.
The steering committee of the National Working Group on Benchmark Reform recently decided to gradually introduce a new benchmark in place of WIBOR, known as WIRF. (Originally, WIBOR was to be replaced by WIRON, which was formerly called WIRD.)
The new WIRF benchmark
WIRF is a benchmark specific to the Polish market and refers to transactions in Polish zlotys. Accordingly, WIRF will not be applied in credit agreements denominated in euro. Eurozone-specific benchmarks, such as the €STR (Euro Short-Term Rate), are used for loans in euros.
WIRF relies on unsecured deposits from credit and financial institutions. Calculation of WIRF involves a weighted average of interest rates from deposit transactions by banks on the interbank market. This process is managed by WSE Benchmark, which is responsible for publication of the benchmark.
Implementation schedule
The first application of the WIRF benchmark is planned for mid-2025, initially in treasury bonds and then in new loan agreements. The process of converting existing loan agreements to the new benchmark is expected to begin in early 2027.
What does this mean for borrowers?
For borrowers, a change in the benchmark can have several important consequences.
New loan agreements: Beginning in mid-2025, new loan agreements using the WIRF benchmark instead of WIBOR are expected to start appearing on the market. Therefore, the interest rate on the loan will be calculated based on WIRF, plus the bank’s margin.
Existing agreements: Existing loan agreements will have to be adjusted to the new benchmark. The process of converting WIBOR to WIRF will begin in early 2027. To minimise the impact of this change on borrowers, a spread adjustment is likely to be applied. This is an additional component of the interest rate to equalise the difference between WIBOR and WIRF, so borrowers are not hit by sudden changes in their loan repayment instalments. Banks will be required to inform their customers about changes to their loan agreements and the details of the transition to the new benchmark.
Transparency and stability: The transparency and stability of WIRF can improve borrowers’ confidence in the benchmark and promote greater acceptance of new WIRF-based loan agreements. On the other hand, the transition period for introduction of the new benchmark may involve some uncertainties before the market fully adjusts to the new benchmark. Borrowers should be aware of these changes and monitor how WIRF affects their financial obligations.
Summary
The change of the benchmark from WIBOR to WIRF is an important step toward increasing the transparency and stability of the Polish financial market. For borrowers, this means adjusting to the new conditions, but also potential benefits resulting from more predictable and stable loan rates.
Paulina Adamczyk, Banking & Project Finance practice, Wardyński & Partners
