Change in the SOFR: LIBOR Transition Gets an Extension

Regulators have announced that the transition away from LIBOR will largely be extended to June 23, 2023, from December 31, 2021. Take advantage of the breathing room to prepare yourself and your clients for the new benchmark, SOFR. This practice note describes how to draft or amend a credit agreement to replace the LIBOR. It also discusses SOFR—and the advantages and disadvantages of this rate relative to LIBOR, along with a timeline of the latest developments related to the transition.

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 Related Content

• The Client Asks: What Happens When LIBOR Ends?
  Learn how to proceed when your client calls and asks what happens to their loan documents after the pending cessation of LIBOR in 2023. Lender and borrower clients with credit agreements that extend past that date and borrowers entering into new financings are asking their lawyers how their financings address the potential loss of LIBOR. This note explains what to look for to ensure that your credit agreement contemplates the end of LIBOR—and what to do if it does not.
• LIBOR Replacement Clause (Hardwired)
  Read about this LIBOR replacement clause (hardwired) that is used in credit agreements to automate the adoption of a substitute benchmark interest rate upon the cessation of LIBOR. The Alternative Reference Rate Committee (ARRC) has recommended that all loan originations use this hard-wired approach by the end of the third quarter 2020.
• Market Trends 2019/2020: LIBOR Succession Clauses
  Review the provisions in credit agreements that allow for a transition to a replacement reference interest rate upon the cessation of LIBOR. This note also provides examples of these fallback LIBOR clauses from recently publicly filed credit agreements.

 
Practical Guidance Updates
Featuring the latest updates in Practical Guidance.

• Coronavirus (COVID-19) Resource Kit: Finance
• The Practical Guidance Journal Fall 2020 Edition
  Prepare for the end of LIBOR and advent of SOFR in this edition featuring Finance insights.
• Document alerts are now available in Practical Guidance. This allows you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.

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