The LMA continues to encourage market participants to replace IBORs with RFRs as a reference rate in all contracts and make all necessary adjustments for using the RFRs as the standard benchmark. The LMA published exposure drafts of compounded SONIA and SOFR facilities agreements to enable market participants to consider certain structural issues related to the use of SONIA and SOFR in loan documentation. Once consensus is reached on certain issues, the LMA will publish these exposure drafts as recommended form documentation.

To the extent IBORs are still referenced in loan documentation, the LMA recommends that its standard ‘Replacement of Screen Rate’ clause be included in loan documentation. In December 2019, the Working Group on Sterling Risk-Free Reference Rates published a consultation on credit spread adjustment methodologies for fallbacks in cash products (including loan and debt capital market products) referencing GBP LIBOR. The consultation was open until February 6, 2020 and we expect the results to be published shortly.