On April 17, the ARRC released a set of key objectives for 2020 that the ARRC has set for itself to support the voluntary use of SOFR as an alternative to USD LIBOR. The ARRC stated that its objectives were developed keeping in mind the current expectation that LIBOR can no longer be guaranteed beyond the end of 2021, noting that this timeline was recently reinforced by the UK FCA in a statement released in the context of dislocations surrounding the coronavirus.
The ARRC’s 2020 Priorities and Milestones include:
- By June 30, 2020, publish revisions to the ARRC’s hardwired fallback language (including a more permissive early opt in trigger), recommended conventions, and supporting materials for business loans.
- By July 31, 2020, establish final recommended conventions for SOFR based floating rate notes, business loans, and securitizations.
- By September 30, 2020, establish an RFP process and criteria for recommendations for selection of administrators:
- of an ARRC-recommended forward looking term SOFR rate to be published in the first half of 2021 if liquidity in SOFR derivatives markets has developed sufficiently, and also establish recommended scopes of use for such a term rate; and
- to publish the ARRC’s recommended spread adjustments and spread-adjusted rates and finalize technical details related to the recommended spread adjustments.
In its announcement, the ARRC also acknowledged its ongoing commitment to continue to (i) pursue potential legislative relief for legacy contracts that may be otherwise difficult to amend and that do not have economically appropriate fallbacks and (ii) continue to work with tax, regulatory, and self-regulatory organizations as they finalize proposals to address the LIBOR transition, encouraging the removal of unintended impediments to the transition and encouraging international regulatory coordination and fostering market understanding of the measures that are taken.
The ARRC’s announcement can be found here.
The ARRC’s 2020 Objectives can be found here.