On June 30, the ARRC published a revised version of its hardwired fallback language for new US Dollar LIBOR-linked syndicated loans. Along with this updated language, the ARRC also updated its user’s guide, which contains guidance for market participants for the adoption of the refreshed fallback provisions.

Continue Reading ARRC Publishes Updated Recommended Fallback Language for New USD LIBOR-Linked Syndicated Loans

On Thursday, June 4, the Consumer Financial Protection Bureau (“CFPB”) issued guidance to address issues arising out of the pending discontinuation of LIBOR and the resulting need for creditors to transition to other benchmarks. As the CFPB has noted, at this time, the transition is expected after 2021, with the anticipated shift to the Secured Overnight Financing Rate (“SOFR”) index supported by the Alternative Reference Rates Committee (ARRC), a public-private working group organized to address the transition. Ahead of an inevitable, challenging transition, the CFPB issued an extensive rulemaking proposal with request for public comment, a revised consumer handbook, and updated compliance guidance.

Continue Reading CFPB Issues Proposals and Updated Guidance Ahead of LIBOR Discontinuation

In his speech in July 2019, Andrew Bailey called for public debate on potential outcomes for legacy contracts that prove unable to convert or be amended to include fallbacks to risk free rates before the discontinuance of LIBOR. In response to that speech, the Working Group on Sterling Risk-Free Reference Rates last week published a paper on how to catalyse the transition of such ‘tough legacy’ contracts away from LIBOR.

To address ‘tough legacy’ contracts, the Working Group has proposed that the UK Government consider introducing legislation. They note that in the U.S., the Alternative Reference Rates Committee (the ARRC) has proposed a similar approach and there would be benefits from the international consistency that would result from the UK mirroring this.


Continue Reading “Tough Legacy” Contracts May Require Legislative Fix to Catalyse Their Transition Away From LIBOR, Says Working Group

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.

Continue Reading ARRC Announces Key Objectives for 2020

On April 17, the ARRC released a webinar providing an in-depth overview of the ARRC’s  proposed New York State legislation.

As previously noted on this blog, the ARRC has indicated that the proposed legislation is intended to minimize legal uncertainty and adverse economic impacts associated with LIBOR transition and would: (i) prohibit a contract party

On April 8, the ARRC announced that it had agreed on a recommended spread adjustment methodology for cash products referencing USD LIBOR.

The ARRC’s recommended methodology is intended for use in for USD LIBOR contracts that have incorporated the ARRC’s recommended hardwired fallback language or for legacy USD LIBOR contracts where a spread-adjusted SOFR can

On March 6, 2020, the ARRC released a proposal for New York State Legislation, which the ARRC states is intended to minimize legal uncertainty and adverse economic impacts associated with LIBOR transition.

According to the ARRC, the proposed legislation would: (i) prohibit a contract party from refusing to perform its contractual obligations or declaring a

On January 31, 2020, the ARRC released a vendor survey and a buy-side checklist. Both documents were developed by the ARRC’s Operations/Infrastructure Working Group and, according to the ARRC, are intended to support market participants’ work to address operational challenges in the transition from USD LIBOR to SOFR. The survey serves as a self-assessment tool

On January 21, 2020, the ARRC released a Consultation on spread adjustment methodologies for cash products referencing U.S. dollar (USD) LIBOR. The ARRC indicated that the spread adjustments are intended for use (i) in USD LIBOR contracts that have incorporated the ARRC’s recommended hardwired fallback language, or (ii) for legacy USD LIBOR contracts where a spread-adjusted SOFR can be selected as a fallback. The adjustments seek to establish a  static  spread  adjustment  that  would  be  fixed  at  a  specified  time  at  or  before  LIBOR’s  cessation and would adjust for the historical differences between LIBOR and SOFR and are intended to make the spread-adjusted rate comparable to LIBOR (the ARRC clarified that it is not considering dynamic spread adjustments). In addition to the methodology for determining spread adjustments, the ARRC is requesting comment on whether a “transition period” over which the applicable spread adjustment would be implemented should be included for any cash products in order to smooth the effects of a potentially abrupt transition to a new spread-adjusted rate, which may differ significantly from the rates prevailing at the time LIBOR is discontinued.

Continue Reading ARRC Consultation on Spread Adjustment Methodologies