Market Trends 2022: Benchmark Rate Floor Provisions

Review this practice note discussing benchmark rate floor provisions, including current market trends in publicly filed credit agreements and commitment letters through August 31, 2022. Lenders tended to increase interest rate floor percentages in 2020 during the height of COVID-19 in response to the dropping LIBOR benchmark rate. With the replacement of LIBOR as a benchmark rate with SOFR in new credit agreements and the recent increases in interest rates by the Federal Reserve Board, SOFR loans have fallen back closer to the norm of 0%.

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Related Content

• Credit Spread Adjustment Tracker
  Check out this tracker identifying certain key benchmark rate terms in new publicly filed loans, including credit spread adjustments for SOFR loans and interest rate floors.

• LIBOR Replacement Clause (Hardwired)
  Take a look at this sample clause used in credit agreements to automate the adoption of a substitute benchmark interest rate upon the cessation of LIBOR. This clause includes guidance and drafting notes.

• LIBOR Replacement Resource Kit
  Review this resource kit providing an overview of replacing LIBOR as the benchmark interest rate in loan documents.

• The Client Asks: What Happens When LIBOR Ends?
  Read this practice note describing how you should proceed when your client calls and asks what happens to their loan documents after the cessation of LIBOR.

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