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Since passing the December 31, 2021 “no new LIBOR” line-in-the-sand drawn by regulators, the pace of new developments in LIBOR transition has slowed as various markets have adapted to pricing transactions at SOFR or some other alternative to LIBOR.  As we close out Q1 2022, here are some of the highlights in events and trends we’ve seen since our last post.

Continue Reading Q1 2022 Update on LIBOR Transition Developments

Where we left off:  In our Mid-Year Check-In blogpost, we noted that progress in the development and readiness of some credit sensitive interest rate indices (e.g., Bloomberg’s BSBY, IBA’s Bank Yield Index and American Financial Exchange’s AMERIBOR) seemed to spark some urgency in the development of SOFR’s forward-looking term rate in Q2, including the ARRC’s selection of CME Group as administrator for Term SOFR, and the CFTC’s SOFR First Initiative to encourage primary market swaps dealers to quote USD swaps at SOFR.  Those efforts culminated in the ARRC’s formal recommendation of Term SOFR for use in the bank loan market on July 29, 2021.

Continue Reading Banks Press Ahead with Term SOFR Preparation; Credit Sensitive Rates Under Scrutiny

On July 22, 2021, Representative Brad Sherman introduced H.R. 4616, the “Adjustable Interest Rate (LIBOR) Act of 2021” (the “Bill”) into the U.S. House of Representatives.  The Act is before the House’s Committee on Financial Services, Committee on Ways and Means, and Committee on Education and Labor.  On July 29, 2021, the House’s Committee on Financial Services voted to advance the Bill, along with certain technical amendments proposed by Representative Sherman.  The version of the Bill approved by the Committee on Financial Services can be accessed here:  Adjustable Interest Rate (LIBOR) Act of 2021 (Committee on Financial Services Version).  The Committee on Ways and Means, and Committee on Education and Labor have yet to act on the Bill.

Continue Reading Federal LIBOR “Tough Legacy” Fix Gains Traction

The last few months have seen the pace of change accelerate in the business loan market’s transition away from LIBOR. Several alternatives to the replacement benchmark rate recommended by the Alternative Reference Rates Committee (ARRC), the Secured Overnight Financing Rate (SOFR), gained momentum in the business loan market in the first part of 2021, and the ARRC and some regulators responded with efforts to highlight why SOFR should be the benchmark of choice. Set forth below are some of the milestones from an already eventful year, as well as some open questions to be worked through in the second half of 2021.

Continue Reading Mid-Year Check In on LIBOR Transition Developments

On May 6, the LSTA published its long-awaited concept Daily SOFR and risk-free rate (RFR)-based multicurrency credit agreements (the Concept RFR Documents). The publication of these documents is a welcomed step in the transition from LIBOR  These Concept RFR Documents illustrate various types of SOFR-based US Dollar credit facilities and

On March 25, 2021, the Alternative Reference Rates Committee (ARRC) released supplemental recommendations for its hardwired fallback language for US dollar denominated syndicated and bilateral loans. The ARRC’s supplemental recommendations follow the certainty on fallback timings and economics afforded by the March 5, 2021 announcements by ICE Benchmark Administration, the UK Financial Conduct Authority and ISDA regarding the cessation of LIBOR.

Continue Reading ARRC Releases Supplemental Versions of its Recommended Hardwired Fallback Language

On March 9, 2021, the Federal Reserve in its Supervision and Regulation Letter (the Letter) provided guidance to Federal Reserve examiners and supervised institutions to assist in assessing progress in preparing for the LIBOR transition.

Specifically, examiners are directed to review the supervised institutions’ “planning for, and progress in, moving away from LIBOR.” Supervised institutions should note that examiners are encouraged to consider taking supervisory action if an institution is not ready to cease issuances of new LIBOR-based contracts by the end of 2021.

Continue Reading Are you Ready for the End of LIBOR? The Fed Issues Guidance on Assessing LIBOR Transition Progress

The U.S. Office of the Comptroller of the Currency published a three-page self-assessment tool for national banks, federal savings associations, and federal branches and agencies of foreign banking organizations to evaluate their preparedness for the expected cessation of LIBOR. The three-page “tool” poses a series of questions for each bank to answer in a self-assessment. 

On Monday, November 30, 2020, ICE Benchmark Administration (“IBA”), as administrator of LIBOR, announced that it will consult in early December 2020 on its plan to cease publication of the overnight and one-, three-, six- and 12-month U.S. Dollar LIBOR (“USD LIBOR”) settings immediately following the LIBOR publication on June 30, 2023.[1] This announcement represents an effective extension of the end date for USD LIBOR, which previously was expected to cease following 2021.

Continue Reading ICE Benchmark Administration Proposes Extension of Most U.S. Dollar LIBOR Tenors Through June 2023; Move is Supported by the UK Financial Conduct Authority

Several remarks and releases by public officials and significant regulatory bodies in the first weeks of November garnered significant attention by financial institutions trying to discern next steps in the wind-down of USD LIBOR.

Continue Reading Signals or Noise in November for LIBOR Transition?