Term SOFR Benchmark Replacement Trends

Review this practice note identifying new Term SOFR market trends. Although benchmark replacement provisions are not as critical as when replacing LIBOR upon its cessation, such fallback provisions remain important and have transitioned to replacing primarily Term SOFR in the event it becomes unavailable. The data analyzed in this practice note was obtained using Market Standards, Practical Guidance’s searchable database of publicly filed credit agreements and commitment letters.

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Related Content

• Credit Agreement Resource Kit
  Check out this resource kit providing an overview of drafting, reviewing, and negotiating a credit agreement, the principal document in a financing transaction. This resource kit links to Practical Guidance materials, including detailed practice notes.

• Credit Spread Adjustment and Rate Floor Tracker (2024)
  Use this credit spread adjustment tracker to identify certain key benchmark rate terms in new publicly filed loans, including credit spread adjustments for SOFR loans and interest rate floors.

• Interest Rate Provisions in Credit Agreements (SOFR)
  Review this practice note describing two pricing options frequently included in syndicated credit agreements—one based on the base rate and the other based on SOFR. The use of SOFR as an interest rate option has become the predominant approach in the market following the cessation of some durations of the LIBOR Rate in 2021 and the complete cessation of LIBOR in June 2023.

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