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
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LMA Publishes Note on the Use of Forward-Looking Term SONIA Reference Rates
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…
GBP Working Group publishes Q&A and Best Practice Guide
As the end of Q1 2021 draws closer, the Working Group on Sterling Risk-Free Reference Rates (the Working Group) published a Q&A that aims to address the end-Q1 milestone for no new GBP LIBOR lending and a best practice guide for GBP referencing loans (the Best Practice Guide) on February 26, 2021.
As discussed in…
OCC Publishes LIBOR-Transition “Self-Assessment Tool”
The U.S. Office of the Comptroller of the Currency published a three-page self-assessment tool for national banks, federal savings associations, and federal branches and agencies of foreign banking organizations to evaluate their preparedness for the expected cessation of LIBOR. The three-page “tool” poses a series of questions for each bank to answer in a self-assessment. …
LMA Publishes RFR Facility Documentation
On January 28, 2021, the UK Loan Market Association (LMA) published exposure drafts of two multicurrency term and revolving facilities agreements which incorporate, among others, backward-looking compounded risk-free rates (the Exposure Drafts). In addition, the LMA published commentary on the Exposure Drafts, which aims to assist market participants in understanding the terms thereof. The Exposure…
Roadmap to the End of LIBOR – Where Are You?
With the end of LIBOR in sight, on January 11, 2021 the Bank of England, FCA and Working Group on Sterling Risk-Free Reference Rates (the Working Group) published a joint statement on the final countdown to the ceasing of publications of all GBP LIBOR settings at the end of 2021 and an updated 2021 Roadmap…
UK Working Group Publishes Paper on Credit Adjustment Spread Methodologies
With the end of LIBOR drawing closer, the FCA, Bank of England and the Working Group on Sterling Risk-Free Reference Rates (the Working Group) are encouraging market participants to actively transition from referencing LIBOR rates in their loan agreements to risk-free rates (such as SONIA). In this respect, one important aspect that market participants need…
ARRC Publishes Updated Recommended Fallback Language for New USD LIBOR-Linked Syndicated Loans
On June 30, the ARRC published a revised version of its hardwired fallback language for new US Dollar LIBOR-linked syndicated loans. Along with this updated language, the ARRC also updated its user’s guide, which contains guidance for market participants for the adoption of the refreshed fallback provisions.…
CFPB Issues Proposals and Updated Guidance Ahead of LIBOR Discontinuation
On Thursday, June 4, the Consumer Financial Protection Bureau (“CFPB”) issued guidance to address issues arising out of the pending discontinuation of LIBOR and the resulting need for creditors to transition to other benchmarks. As the CFPB has noted, at this time, the transition is expected after 2021, with the anticipated shift to the Secured…
Treasury Proposes Guidance to Minimize Tax Consequences of LIBOR Phase-Out
The U.S. Treasury Department and the Internal Revenue Service (IRS) recently issued proposed regulations providing guidance to taxpayers on the tax consequences of modifying financial instruments and contracts in advance of the upcoming phase-out of the London Interbank Offered Rate (LIBOR) and other interbank rates (collectively, IBORs).…