The LMA’S Latest Tools

On 11 September 2020, the LMA added to their complement of exposure drafts by publishing a draft multicurrency term and revolving facilities agreement incorporating rate switch provisions (the “Switch FA”).  This came on the heels of a note issued by the LMA[1] setting out optional supplementary language (the “LMA Supplement”) to be added to its existing Revised Replacement of Screen Rate Clause.

Why Is The LMA Producing These Documents Now?

The LMA has augmented its Revised Replacement of Screen Rate Clause before, but the Switch FA and the LMA Supplement were drafted in response to specific statements made by the Working Group on Sterling Risk-Free Reference Rates (“RFRWG”).  Those statements[2] (the “RFRWG Statements”) made it clear that the February 2020 form of Revised Replacement of Screen Rate Clause[3] would not satisfy the RFRWG’s objective that after the end of Q3 2020, sterling LIBOR referencing loan products should include a contractual mechanism for conversion to a suitable SONIA-based, or other alternative risk-free, rate (“RFR”).  These latest documents from the LMA are the most recent salvo in their ongoing efforts to facilitate the transition of the loan market away from LIBOR to alternative RFRs.


Continue Reading Documenting LIBOR Transition in the Loan Markets: The LMA Offers New Solutions, But Others Likely Will Follow

The early take-up in 2019 of SONIA in the Sterling floating rate note markets was made possible because SONIA (unlike SOFR and many other risk free rates) was already in use in the well-established market of sterling denominated overnight indexed swaps (OIS).  This fortuitous fact meant that regular issuers of Sterling LIBOR-linked securities could, with