Borrowers and administrative agents in the syndicated loan markets continue to negotiate and fine-tune various fallback provisions related to LIBOR transition. Although pricing had traditionally been considered a “sacred right” requiring all lender approval, one of the most ubiquitous aspects to these LIBOR-transition-related fallback provisions is limiting or removing syndicate members’ consent rights to the replacement rate in the name of easing the logistics of such a massive overhaul. In fact, both the “Amendment Approach” and the “Hardwired Approach” recommended by the Alternative Reference Rates Committee (“ARRC”) have moved away from an all-lender standard. Although moving to a lesser standard should ease the pain of transition, prudent syndicate members will review these fallbacks with caution. Below is a list of LIBOR-transition-related issues that syndicate members should consider before making a commitment to lend.
Continue Reading Three LIBOR Transition Considerations for Syndicate Lenders