18 Aug 2021

NEW – LIBOR Floor Provisions: Market Trends 2020/2021

This practice note discusses LIBOR floor provisions, including current market trends in publicly filed credit agreements and commitment letters from the second half of 2020 and first half of 2021. Lenders tended to increase LIBOR floor percentages in 2020 during the height of COVID-19 in response to the dropping LIBOR benchmark rate. With a stabilizing market in 2021 and the end of LIBOR as a benchmark rate in sight, lenders have not focused on LIBOR floors in recent transactions and LIBOR floor rates have fallen back closer to the norm of 0% in the first half of 2021.

The following analysis is based on 123 publicly filed credit agreements that included a LIBOR floor from the second and third quarters of 2020 and 186 publicly filed credit agreements that included a LIBOR floor from the fourth quarter of 2020 and the first quarter of 2021. The data analyzed in this practice note was obtained using Market Standards, the searchable database from Practical Guidance of publicly filed credit agreements and commitment letters that enables users to search, compare, and analyze over 2300 credit agreements using approximately 90 detailed deal points and over 370 commitment letters using approximately 70 deal points to filter search results. For more information on Market Standards, click here.

For more information on recent trends concerning LIBOR floors, see Interest Rate Provisions in Credit Agreements, SOFR Loan Documentation: 8 Things for Borrowers to Think About, The Client Asks: What Happens When LIBOR Ends?, and LIBOR Replacement Resource Kit.

LIBOR Floor Provisions

Countries sometimes attempt to stimulate their economies by reducing benchmark interest rates, including LIBOR. Benchmark rates have at times been reduced to zero or even been negative. Due to the potential for benchmark rates to be reduced, lenders often include a benchmark floor in their credit agreements, which commonly was 0% prior to COVID-19.

During the height of COVID-19 in the second and third quarters of 2020, the U.S. Federal Reserve lowered benchmark rates to near zero. Many lenders began to counteract such decline in benchmark rates by increasing the LIBOR floor in their transactions to percentages greater than zero, typically in the range of 0.5% to 1.25%. Due to optimism that the economy is recovering and as the LIBOR cessation date is approaching at the end of 2021, banks have become less focused on increasing LIBOR floors. In the last quarter of 2020 and into 2021, the number of transactions with a LIBOR floor above 0% has steadily declined.

Out of 123 credit agreements surveyed from the second and third quarters of 2020 that included LIBOR floors, 64 deals (52%) included a LIBOR floor greater than 0%, and 59 deals (48%) included a 0% LIBOR floor.

Visualization of LIBOR Floors Q2 2020 and Q3 2020

Source: Market Standards, date range 4/1/2020 to 9/30/2020

Of those 64 deals with a LIBOR floor greater than 0%, 57 deals had a LIBOR floor between 0.1% and 1%. Seven deals had a LIBOR floor greater than 1% ranging from 1.5% to 2%.

Out of 186 credit agreements surveyed from the fourth quarter of 2020 and the first quarter of 2021 that included a LIBOR floor, 50 (27%) deals included a LIBOR floor greater than 0% ranging from 0.25% to 1%. The remaining 136 (73%) deals had a LIBOR floor of 0%.

Visualization of LIBOR Floors Q4 2020 and Q1 2021

Source: Market Standards, date range 10/1/2020 to 3/31/2021

Examples of Publicly Filed Credit Agreements in Lexis Market Standards

Camping World Holdings, Inc.

Agreement Date	June 3, 2021
Agreement	Credit Agreement
Company	CWGS Group, LLC
Administrative Agent	Goldman Sachs Bank USA
Facility Size/Type	$1.1 billion initial term loan commitment $65 million initial revolving commitment
Industry	Retail—Auto Dealers and Gasoline Stations
Applicable Interest Rate Margin	Ranges from 2.25% to 2.50% for Eurocurrency loans depending on borrower's total net leverage ratio Ranges from 1.25% to 1.50% for ABR loans depending on borrower's total net leverage ratio
LIBOR Floor	The LIBO Screen Rate will be deemed to be 0%, if such rate would otherwise be determined to be less than 0% Solely with respect to the initial term loans, the LIBO Screen Rate will be deemed to be 0.75%, if such rate would otherwise be less than 0.75%

Stitch Fix, Inc.

Agreement Date	June 2, 2021
Agreement	Amended and Restated Credit Agreement
Company	Stitch Fix, Inc.
Administrative Agent	Silicon Valley Bank
Facility Size/Type	$100 million revolving commitment
Industry	Retail—Catalog and Mail-Order
Applicable Interest Rate Margin	25% for Eurodollar loans 1.25% for ABR loans
LIBOR Floor	Eurodollar base rate shall not be less than 0%

MSA Safety Inc.

Agreement Date	May 24, 2021
Agreement	Fourth Amended and Restated Credit Agreement
Company	MSA Safety Incorporated, et al.
Administrative Agent	PNC Bank, National Association
Facility Size/Type	$900 million revolving credit facility
Industry	Orthopedic, Prosthetic and Surgical Appliances, and Supplies
Applicable Interest Rate Margin	Ranges from 0.875% to 1.750% for LIBOR rate loans depending on borrower's net leverage ratio Ranges from 0.000% to 0.750% for base rate loans depending on borrower's net leverage ratio
LIBOR Floor	Benchmark rate floor applicable to the LIBOR rate, if not otherwise specified, is 0%

Chipotle Mexican Grill, Inc.

Agreement Date	April 13, 2021
Agreement	Revolving Credit Agreement
Company	Chipotle Mexican Grill, Inc.
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$500 million revolving commitment
Industry	Retail—Eating Places
Applicable Interest Rate Margin	Ranges from 1.375% to 2.125% for Eurodollar loans depending on borrower's total leverage ratio Ranges from 0.375% to 1.125% for ABR loans depending on borrower's total leverage ratio
LIBOR Floor	If the LIBO Screen Rate is less than 0%, then such rate shall be deemed to be 0% for purposes of the credit agreement

Petiq, LLC

Agreement Date	April 13, 2021
Agreement	Term Credit and Guaranty Agreement
Company	Petiq, LLC
Administrative Agent	Jefferies Finance LLC
Facility Size/Type	$500 million revolving commitment
Industry	Wholesale—Drugs, Drug Proprietaries, and Druggists' Sundries
Applicable Interest Rate Margin	25% for Eurodollar rate loans 3.25% for base rate loans
LIBOR Floor	Adjusted Eurodollar rate shall at no time be less than 0.50%

American Electric Power Company, Inc.

Agreement Date	March 31, 2021
Agreement	Credit Agreement
Company	American Electric Power Company, Inc.
Administrative Agent	Wells Fargo Bank, National Association
Facility Size/Type	$1 billion revolving commitment
Industry	Electric Services
Applicable Interest Rate Margin	Ranges from 1.000% to 1.750% for Eurodollar rate advances depending on borrower's credit rating level Ranges from 0.000% to 0.750% for base rate advances depending on borrower's credit rating level
LIBOR Floor	If the Eurodollar rate is less than 0%, it shall be deemed to be 0% for purposes of the credit agreement

Community Healthcare Trust Inc.

Agreement Date	March 19, 2021
Agreement	Third Amended and Restated Credit Agreement
Company	Community Healthcare Trust Incorporated
Administrative Agent	Truist Bank
Facility Size/Type	$400 million revolving and term commitments
Industry	Real Estate Investment Trusts
Applicable Interest Rate Margin	Eurodollar Rate: Ranges from 0.775% to 1.45% for revolving Eurodollar rate loans depending on borrower's credit ratings Ranges from 1.15% to 1.70% for A-2 term Eurodollar rate loans depending on borrower's credit ratings Ranges from 1.35% to 1.90% for A-3/A-4 term Eurodollar rate loans depending on borrower's credit ratings Base Rate: Ranges from 0.00% to 0.45% for revolving base rate loans depending on borrower's credit ratings Ranges from 0.15% to 0.70% for A-2 term base rate loans depending on borrower's credit ratings Ranges from 0.35% to 0.90% for A-3/A-4 term base rate loans depending on borrower's credit ratings
LIBOR Floor	If the LIBOR rate is less than 0%, such rate is deemed to be 0%

Brightsphere Investment Group Inc.

Agreement Date	February 23, 2021
Agreement	Amended and Restated Revolving Credit Agreement
Company	Acadian Asset Management LLC, as assignee of Brightsphere Investment Group Inc.
Administrative Agent	Citibank, N.A.
Facility Size/Type	$125 million revolving commitment
Industry	Investment Advice
Applicable Interest Rate Margin	Ranges from 1.50% to 2.00% for Eurodollar loans Ranges from 0.50% to 1.00% for ABR loans
LIBOR Floor	If the LIBO Screen Rate is less than zero, such rate shall be deemed to be 0% for purposes of the credit agreement

PPG Industries, Inc.

Agreement Date	February 19, 2021
Agreement	Term Loan Credit Agreement
Company	PPG Industries, Inc.
Administrative Agent	PNB Paribas
Facility Size/Type	$2 billion term loan commitment
Industry	Paints, Varnishes, Lacquers, Enamels, and Allied Products
Applicable Interest Rate Margin	Ranges from 0.750% to 1.250% for Eurocurrency rate loans depending on borrower's credit ratings Ranges from 0.000% to 0.250% for base rate loans depending on borrower's credit ratings
LIBOR Floor	If the LIBO rate is less than 0%, such rate shall be deemed to be 0% for purposes of the credit agreement

Credit Acceptance Corp.

Agreement Date	January 29, 2021
Agreement	Loan and Security Agreement
Company	Credit Acceptance Funding LLC 2021-1
Administrative Agent	Fifth Third Bank
Facility Size/Type	$100 million term commitment
Industry	Personal Credit Institutions
Applicable Interest Rate Margin	0% for prime rate or Fed funds rate loans N/A for benchmark rate loans calculated using the LIBOR rate
LIBOR Floor	In the event that the LIBOR rate is less than 0%, such rate shall be deemed to be 0% for purposes of the credit agreement

Express, LLC

Agreement Date	January 13, 2021
Agreement	Asset-Based Term Loan Agreement
Company	Express, LLC
Administrative Agent	Wells Fargo Bank, National Association
Facility Size/Type	$90 million term loan commitment $50 million delayed draw term loan commitment
Industry	Retail—Apparel & Accessory Stores
Applicable Interest Rate Margin	Ranges from 7.00% to 8.25% for LIBO rate loans depending on borrower's level of EBITDA Ranges from 6.00% to 7.25% for base rate loans depending on borrower's level of EBITDA
LIBOR Floor	If at any time the published LIBO rate is below 0%, then the LIBO rate determined for the credit agreement shall be deemed to be 0%

AssetMark Financial Holdings, Inc.

Agreement Date	December 30, 2020
Agreement	Credit Agreement
Company	AssetMark Financial Holdings, Inc.
Administrative Agent	Bank of Montreal
Facility Size/Type	$250 million revolving commitment
Industry	Investment Advice
Applicable Interest Rate Margin	Ranges from 2.000% to 3.625% for Eurodollar loans depending on borrower's total leverage ratio for the applicable pricing date Ranges from 1.000% to 2.625% for base rate loans depending on borrower's total leverage ratio for the applicable pricing date
LIBOR Floor	If LIBOR as determined is less than 0%, LIBOR will be deemed to be 0% for purposes of the credit agreement

Matrix Service Company

Agreement Date	November 2, 2020
Agreement	Fifth Amended and Restated Credit Agreement
Company	Matrix Service Company
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$200 million revolving commitment
Industry	Construction—Special Trade Contractors
Applicable Interest Rate Margin	Ranges from 2.00% to 3.00% for Eurocurrency, EURIBOR, and CDOR loans depending on borrower's leverage ratio Ranges from 1.00% to 2.00% for ABR loans depending on borrower's leverage ratio Ranges from 2.50% to 3.50% for Canadian prime rate loans depending on borrower's leverage ratio
LIBOR Floor	If any screen rate (including the LIBO rate) is less than 0%, such rate shall be deemed to be 0% for purposes of the credit agreement

DoubleVerify Holdings, Inc.

Agreement Date	October 1, 2020
Agreement	Amendment and Restatement Agreement
Company	DoubleVerify Inc.
Administrative Agent	Capital One, N.A.
Facility Size/Type	$150 million revolving commitment
Industry	Services—Computer Programming
Applicable Interest Rate Margin	Ranges from 2.00% to 2.75% for Eurodollar loans depending on borrower's total net leverage ratio Ranges from 1.00% to 1.75% for ABR loans depending on borrower's total net leverage ratio
LIBOR Floor	Eurodollar base rate shall not be deemed to be less than 0.75%

Purple Innovation, LLC

Agreement Date	September 3, 2020
Agreement	Credit Agreement
Company	Purple Innovation, LLC
Administrative Agent	KeyBank National Association
Facility Size/Type	$55 million revolving commitment $45 million term loan commitment
Industry	Household Furniture
Applicable Interest Rate Margin	Ranges from 3.00% to 3.75% for Eurodollar rate loans depending on borrower's consolidated net leverage ratio Ranges from 2.00% to 2.75% for base rate loans depending on borrower's consolidated net leverage ratio
LIBOR Floor	Adjusted Eurodollar rate is the greater of 0.50%, and LIBOR If benchmark replacement for adjusted Eurodollar rate is less than 0.50%, then such rate will be deemed to be 0.50% for purposes of the credit agreement

Pyxus International, Inc.

Agreement Date	August 24, 2020
Agreement	Exit Term Loan Credit Agreement
Company	Pyxus Holdings, Inc.; Pyxus International, Inc.; Pyxus Parent, Inc.
Administrative Agent	Alter Domus (US) LLC
Facility Size/Type	$213.42 million term commitment
Industry	Wholesale—Farm Product
Applicable Interest Rate Margin	00% for LIBO rate loans 00% for prime rate loans 0.50% for Fed funds rate loans
LIBOR Floor	In no event shall the LIBO rate be less than 1.5%

Doordash, Inc.

Agreement Date	August 7, 2020
Agreement	Amended and Restated Agreement
Company	Doordash, Inc.
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$300 million original revolving commitment $100 million incremental revolving commitment
Industry	Services—Business Services, Not Elsewhere Classified
Applicable Interest Rate Margin	00% for Eurodollar loans 0.00% for ABR loans
LIBOR Floor	If the LIBO Screen Rate as determined is less than 0%, the Screen Rate shall for all purposes of the credit agreement be 0%

Waste Management, Inc.

Agreement Date	July 28, 2020
Agreement	Credit Agreement
Company	Waste Management, Inc.
Administrative Agent	Mizuho Bank, Ltd.
Facility Size/Type	$3 billion revolving commitment
Industry	Refuse Systems
Applicable Interest Rate Margin	Ranges from 1.00% to 1.30% for Eurocurrency rate loans depending on borrower's credit ratings Ranges from 0.000% to 0.300% for base rate loans depending on borrower's credit ratings
LIBOR Floor	If the Eurocurrency rate is less than 0%, then such rate shall be deemed 0% for purposes of the credit agreement

Axogen, Inc.

Agreement Date	June 30, 2020
Agreement	Term Loan Agreement
Company	Axogen, Inc.
Administrative Agent	Argo SA LLC
Facility Size/Type	$75 million term loan commitment
Industry	Electromedical and Electrotherapeutic Apparatus
Applicable Interest Rate Margin	7.5% for LIBOR rate loans
LIBOR Floor	LIBOR floor is 2.0%

Carnival Corporation

Agreement Date	June 30, 2020
Agreement	Term Loan Agreement
Company	Carnival Corporation Carnival Finance LLC
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$1.86 billion term loan facility
Industry	Water Transportation
Applicable Interest Rate Margin	50% for base rate loans 50% for LIBOR rate loans 7.50% for EURIBOR rate loans
LIBOR Floor	If the LIBO Screen Rate is less than 0%, then such rate shall be deemed to be 0% for purposes of the credit agreement

Examples of Publicly Filed Commitment Letters in Lexis Market Standards

Oasis Petroleum Inc.

Commitment Date	May 3, 2021
Agreement	Commitment Letter
Company	Oasis Petroleum Inc.
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$500 million bridge commitment
Industry	Crude Petroleum and Natural Gas
Applicable Interest Rate Margin	6.50% increasing by 0.50% at the end of each three month period after closing for Eurodollar rate loans
LIBOR Floor	If the LIBO Screen Rate is less than 1.0%, such rate shall be deemed to be 1.0% for purposes of calculating such rate

Skyworks Solutions, Inc.

Commitment Date	April 22, 2021
Agreement	Project Mansfield US$2,500,000,000 Bridge Facility Commitment Letter
Company	Skyworks Solutions, Inc.
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$2.5 billion bridge facility commitment
Industry	Semiconductors and Related Devices
Applicable Interest Rate Margin	Ranges from 1.125% to 2.000% for LIBO rate loans depending on borrower's credit ratings Ranges from 0.125% to 1.000% for base rate loans depending on borrower's credit ratings
LIBOR Floor	If the LIBO Screen Rate is less than 0%, such rate shall be deemed to be 0%

Synnex Corporation

Commitment Date	March 22, 2021
Agreement	Project Spire Bridge Commitment Letter
Company	Synnex Corporation
Administrative Agent	Citibank, N.A.; Citicorp USA, Inc.; Citicorp North America, Inc.; Citigroup Global Markets Inc.
Facility Size/Type	$1.5 billion senior unsecured term bridge facility commitment $2.5 billion senior unsecured term bridge facility commitment $3.5 billion senior unsecured revolving credit facility commitment
Industry	Wholesale—Computers, Peripherals, and Software
Applicable Interest Rate Margin	Ranges from 1.125% to 1.750% for LIBOR loans depending on borrower's credit ratings Bridge unused fee ranges from 0.125% to 0.300% depending on borrower's credit ratings For ABR loans, margin is 1.00% less than margin for LIBOR loans but in any event not less than 0%
LIBOR Floor	Adjusted LIBOR is the greater of 0% and LIBOR as determined

Perspecta Inc.

Commitment Date	February 18, 2021
Agreement	Project Jagman Amended and Restated Commitment Letter
Company	Peraton Corp.; Peraton Inc.
Administrative Agent	JPMorgan Chase Bank, N.A.; Alter Domus (US) LLC
Facility Size/Type	$3,775,000 senior secured incremental term loan facility commitment $200 million incremental revolving commitment $1,340,000 incremental senior secured second lien term loan facility commitment
Industry	Services—Computer Processing and Data Preparation and Processing
Applicable Interest Rate Margin	For first lien incremental term facility, 4.25% for LIBOR loans and 3.25% for base rate loans with two 0.25% step downs depending on borrower's first lien leverage ratio Margin for incremental revolving facility is the same as for the existing revolving facility For second lien incremental term facility, 8.00% for LIBOR loans and 7.00% for base rate loans
LIBOR Floor	LIBOR for purposes of calculating interest on any loan under the second lien term facility shall be deemed to be not less than 0.75%

Vielo Bio, Inc.

Commitment Date	January 31, 2021
Agreement	Project Venus Commitment Letter
Company	Horizon Therapeutics USA Inc.
Administrative Agent	Citibank, N.A.
Facility Size/Type	$1.3 billion incremental term loan commitment
Industry	Pharmaceutical Preparations
Applicable Interest Rate Margin	25% for LIBO rate loans 25% for alternate base rate loans Rates step down 0.25% depending on borrower's total net leverage ratio
LIBOR Floor	In no event shall the LIBO rate applicable to the term loan facility be less than 0.50%

Seacor Holdings Inc.

Commitment Date	December 4, 2020
Agreement	Project Safari Commitment Letter
Company	Safari Parent, Inc.
Administrative Agent	HPS Investment Partners, LLC Ally Bank
Facility Size/Type	$395.60 million first lien term loan facility commitment $169.40 million first lien delayed draw facility commitment $100 million senior secured asset-based facility commitment
Industry	Deep Sea Foreign Transportation of Freight Establishments
Applicable Interest Rate Margin	For term loan facility: 6.75% for LIBOR rate loans, and 5.75% for ABR loans, with two step down adjustments of 0.25% each depending on borrower's total net leverage ratio For ABL loans: ○ Ranges from 2.00% to 2.50% for Eurodollar loans excluding supplemental amount and from 4.00% to 4.50% for supplemental amount, depending on average excess availability ○ Ranges from 1.00% to 1.50% for ABR loans excluding supplemental amount and from 3.00% to 3.50% for supplemental amount, depending on average excess availability
LIBOR Floor	Adjusted LIBOR in no event shall be less than 1.0%

Tuesday Morning Corp.

Commitment Date	November 2, 2020
Agreement	Commitment Letter
Company	Tuesday Morning, Inc.
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$110 million senior secured revolving credit facility commitment
Industry	Retail—Variety Stores
Applicable Interest Rate Margin	For the first 12 months after closing, 2.75% for Eurodollar rate loans and 1.75% for CB floating rate loans After the first 12 months, ranges from 2.25% to 2.75% for Eurodollar loans depending on excess availability After the first 12 months, ranges from 1.25% to 1.75% for CB floating rate loans depending on excess availability
LIBOR Floor	The adjusted LIBO rate shall have a floor of 0.50% at all times

Modivcare Inc.

Commitment Date	September 28, 2020
Agreement	Commitment Letter
Company	The Providence Service Corporation
Administrative Agent	Jefferies Finance LLC
Facility Size/Type	$30 million senior secured first lien revolving facility commitment $600 million senior unsecured bridge loan facility commitment
Industry	Transportation Services
Applicable Interest Rate Margin	For revolving credit loans, 4.00% for LIBOR loans and 3.00% for base rate loans For bridge loans, 5.25% for LIBOR loans with increases of 0.50% each three-month period after closing
LIBOR Floor	Three-month LIBOR shall in no event be less than 1.0%

Roper Technologies, Inc.

Commitment Date	August 12, 2020
Agreement	Bridge Facility Commitment Letter
Company	Roper Technologies, Inc.
Administrative Agent	Bank of America, N.A.
Facility Size/Type	$4 billion 364-day senior unsecured bridge facility commitment ($2.5 million tranche A and $1.5 million tranche B)
Industry	Industrial Instruments
Applicable Interest Rate Margin	Ranges from 1.00% to 1.75% for LIBOR loans depending on borrower's credit ratings Ranges from 0.00% to 0.75% for alternate base rate loans depending on borrower's credit ratings
LIBOR Floor	If the LIBOR rate (or the base rate) is less than 0%, such rate shall be deemed 0% for purposes of the bridge facility

California Resources Corporation

Commitment Date	July 15, 2020
Agreement	Senior Secured Superpriority Debtor-In-Possession Revolving Credit Facility Commitment Letter
Company	California Resources Corporation
Administrative Agent	JPMorgan Chase Bank, N.A.
Facility Size/Type	$483,010,655.62 senior secured superpriority debtor-in-possession revolving credit facility commitment
Industry	Crude Petroleum and Natural Gas
Applicable Interest Rate Margin	50% for LIBOR loans 3.50% for base rate loans
LIBOR Floor	1.00% LIBOR floor

To find this article in Lexis Practical Guidance, follow this research path:

RESEARCH PATH: Practical Guidance, Finance