LIBOR Transition Blog

Where we left off:  In our Mid-Year Check-In blogpost, we noted that progress in the development and readiness of some credit sensitive interest rate indices (e.g., Bloomberg’s BSBY, IBA’s Bank Yield Index and American Financial Exchange’s AMERIBOR) seemed to spark some urgency in the development of SOFR’s forward-looking term rate in Q2, including the

On July 22, 2021, Representative Brad Sherman introduced H.R. 4616, the “Adjustable Interest Rate (LIBOR) Act of 2021” (the “Bill”) into the U.S. House of Representatives.  The Act is before the House’s Committee on Financial Services, Committee on Ways and Means, and Committee on Education and Labor.  On July 29, 2021, the House’s Committee on

The last few months have seen the pace of change accelerate in the business loan market’s transition away from LIBOR. Several alternatives to the replacement benchmark rate recommended by the Alternative Reference Rates Committee (ARRC), the Secured Overnight Financing Rate (SOFR), gained momentum in the business loan market in the first part of 2021, and

On June 4, 2021, the Loan Market Association (LMA) published a recommended form of its reference rate selection agreement (the Selection Agreement), which has been updated following market feedback. The Selection Agreement has been updated to reflect the LMA’s suite of RFR-based documentation and rate switch agreements, and the conventions found in those documents.

On May 20, 2021, the UK Financial Conduct Authority (FCA) published a consultation on its proposed policy framework for exercising two of its new powers under the Benchmarks Regulation, as introduced by the UK Financial Services Act 2021 (UK BMR). These powers are designed to facilitate an orderly wind down of critical benchmarks such as

On May 6, the LSTA published its long-awaited concept Daily SOFR and risk-free rate (RFR)-based multicurrency credit agreements (the Concept RFR Documents). The publication of these documents is a welcomed step in the transition from LIBOR  These Concept RFR Documents illustrate various types of SOFR-based US Dollar credit facilities and RFR-based multicurrency credit facilities which

On March 30, 2021, the LMA published its exposure draft RFR documentation as recommended forms, and updated the documentation to reflect, among other things, the Sterling Risk-free Rate Working Group’s (the Working Group) updated conventions. The LMA also replaced their single currency SONIA and SOFR exposure drafts with two recommended form single currency RFR

On March 25, 2021, the Alternative Reference Rates Committee (ARRC) released supplemental recommendations for its hardwired fallback language for US dollar denominated syndicated and bilateral loans. The ARRC’s supplemental recommendations follow the certainty on fallback timings and economics afforded by the March 5, 2021 announcements by ICE Benchmark Administration, the UK Financial Conduct Authority and

On March 26, 2021, the LMA published a note outlining considerations for market participants relating to the use of forward-looking term SONIA reference rates (Term SONIA Rates).

Term SONIA Rates have been available in beta form since July 2020, and available for use since 11 January 2021. Term SONIA Rates are expected to have limited