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Mary Jo N. Miller is Mayer Brown’s US Banking & Finance professional support lawyer, and a member of the firm’s Knowledge Management department. She uses her extensive experience as a banker and finance lawyer to help the practice stay abreast of cutting edge financing issues and products, and deliver work product of the highest quality. Mary Jo’s practice also focuses on developing form documents and other practice resources, training lawyers, and assisting in the development and implementation of technology to allow the practice’s lawyers to leverage internal and external knowledge to build deeper client relationships and deliver excellent client service.

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On 19 July 2022, the Federal Reserve Board (the “Board”) published a notice of proposed rulemaking – Regulation Implementing the Adjustable Interest Rate (LIBOR) Act, as it was required to do by Section 110[1] of the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”),[2] which was signed into law on 15 March 2022.[3]

In its related press release, the Board notes, “Consistent with the [LIBOR Act], the proposal would replace references to LIBOR in certain contracts with the applicable Board-selected replacement rate after June 30, 2023. The contracts include those governed by [US] law that do not mature before LIBOR ends and that lack adequate fallback provisions. The proposal identifies separate Board-selected replacement rates for derivatives transactions, contracts where a government-sponsored enterprise is a party, and all other affected contracts. As required by the [LIBOR Act], each proposed replacement rate is based on the Secured Overnight Financing Rate.”

Continue Reading Switching to SOFR: Proposed Rule Published to Implement the 2022 Federal LIBOR Act

Market participants have been warned not to kid themselves. The last remaining settings of the London InterBank Offered Rate—those relating to select US Dollar tenors—are scheduled to become unavailable following publication on 30 June 2023. After this final USD LIBOR publication, the sunsetting of “the world’s most important number” will be complete.

Continue Reading No foolin’: USD LIBOR to sunset one year from today

With the inclusion of the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) as Division U of H.R. 2471, Consolidated Appropriations Act, 2022 (the “Appropriations Act”) passed by the U.S. House of Representatives on 9 March 2022 and the Senate on 10 March 2022, the United States is on the cusp of a federal solution for legacy LIBOR-linked contracts that contain inadequate fallback provisions, or none at all. Indeed, the final version of the legislation provides additional legal certainty with respect to the use of non-SOFR benchmarks not included in the earlier version of the legislation passed by the U.S. House of Representatives.

Continue Reading Consolidated Appropriations Act Advances Federal LIBOR Transition Solution

With fewer than 30 days until the cessation of LIBOR, another piece of the puzzle has fallen into place for U.S. dollar LIBOR transition. On 30 November 2021, Refinitiv, the ARRC-preferred publisher of spread-adjusted SOFR-based fallback rates, announced that its USD IBOR Institutional Cash Fallbacks (“Institutional Fallbacks”), launched on 11 August 2021 as prototype rates, are now available for use as production benchmarks.

Continue Reading Refinitiv Spread-Adjusted Fallback Rates Become Production Benchmarks

On 20 October 2021, in a Joint Statement on Managing the LIBOR Transition, the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (“CFPB”), Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and State Bank and Credit Union Regulators (the “Regulators”) emphasized their expectations that supervised institutions will transition away from LIBOR in an orderly fashion by the end of 2021. Transition preparedness will be an increasing area of supervisory focus and review.

Continue Reading Financial Regulators Clarify Key LIBOR Transition Considerations But Some Questions Remain

Despite recent regulatory “encouragement” to adopt SOFR as “preferred” by the Alternative Reference Rates Committee (ARRC), we continue to observe credit agreements in the US loan markets that use a credit-sensitive alternative rate (CSR) to SOFR.

In fact, a recent check of public filings showed eight reported credit agreements that used a CSR, specifically the

On 29 July 2021, the Alternative Reference Rates Committee formally recommended the forward-looking SOFR term rates published by CME Group. As reported in our earlier blog post, Almost Time for Term SOFR, the rate is recommended for use in business loans, as well as the related hedges and securitizations (notably for CLOs).

Continue Reading It’s Here! The ARRC Formally Recommends CME Group’s SOFR Term Rate

On 21 July 2021, the U.S. Alternative Reference Rates Committee (“ARRC”) announced the publication of conventions and use cases for employing Term SOFR, as produced by CME Group, in transitioning loan products away from LIBOR. Although the ARRC has not yet recommended the use of Term SOFR, it published these new resources in anticipation of announcing shortly a formal recommendation for the use of Term SOFR “across financial markets.”

While generally helpful to support a smooth transition, the ARRC noted that Term SOFR will be especially helpful in the business loans market, particularly multi-lender facilities, middle market loans, and trade finance facilities, as well as in limited cases of hedges and securitizations tied to term rates.

Continue Reading Almost Time for Term SOFR