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Life After LIBOR: Amending Existing Mortgage Instruments, Fallback Language, SOFR and Spread Adjustments

Adjustable Interest Rate (LIBOR) Act, LSTA Amendment Forms, CFPB's Interim Final Rule

Recording of a 90-minute premium CLE video webinar with Q&A

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Conducted on Tuesday, August 8, 2023

Recorded event now available

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This CLE webinar will discuss the steps real estate counsel must take now to amend existing credit agreements tied to LIBOR to transition appropriately to a new benchmark rate. LIBOR became discontinued on June 30, 2023. The expectation by regulatory agencies is that institutions need to ensure that replacement alternative rates are negotiated where needed and in place by June 30, 2023, for all LIBOR-referencing contracts including investments, derivatives, and loans. However, many institutions will not have satisfied this requirement by the deadline, and there exists a large backlog of loans that continue to use LIBOR as the benchmark rate. The panel will discuss issues to consider in implementing an alternative rate and best practices for incorporating fallback language into those legacy agreements as well as form documents for future transactions. The panel will also discuss the Adjustable Interest Rate (LIBOR) Act and the legacy contracts to which it applies.


All remaining U.S. dollar LIBOR tenors will end or become nonrepresentative on June 30, 2023. While LIBOR has been phased out for new originations, much of the U.S. loan market has a backlog of legacy transactions that remain tied to LIBOR. Finance counsel must understand the replacement rate landscape when amending loan documents.

The parameters for transitioning a LIBOR-based loan facility to an alternative benchmark vary across credit agreements. SOFR is now available in various forms, but the credit adjustment spread (CAS) added to SOFR is negotiable. Banks are not required to use SOFR, and some are considering alternatives, including "credit-sensitive" rates that include some measure of the cost of unsecured borrowing. Many credit agreements require the parties to agree on the choice of replacement benchmark, negotiate the inclusion of a CAS, and/or obtain affirmative or negative consent from a syndicate of lenders.

The Adjustable Interest Rate (LIBOR) Act, signed into law on March 15, 2022, establishes a national framework for replacing LIBOR in contracts lacking adequate fallback provisions. In January 2023, the Federal Reserve Board promulgated rules to provide additional details necessary to implement the Act. Also, on April 28, 2023, the CFPB issued an interim final rule to reflect the enactment of the Adjustable Interest Rate Act (LIBOR Act) and its implementing regulation promulgated by the Federal Reserve Board. This interim final rule, among other things, addressed treatment of the 12-month USD LIBOR index and its replacement index.

Amendment forms published by the Loan Syndications and Trading Association (LSTA) operate as a one-size-fits-all document that overrides existing LIBOR provisions with SOFR provisions contained in the forms. This approach is expedient but requires reading the existing LIBOR based instrument together with the separate LSTA document.

Listen as our authoritative panel discusses the impact of the LIBOR phaseout, the use of SOFR and other alternative rates, and the remaining transition challenges and potential litigation risks. The panel will discuss the applicability of state and federal law, and appropriate uses for the LSTA amendment forms.



  1. LIBOR: timeline for the phaseout
  2. Alternative reference rates
    1. ARRC recommended SOFR and term SOFR rates by product
    2. Credit-sensitive alternatives
    3. Spread adjustments
  3. Impact on interest rate swaps
    1. ISDA IBOR Fallbacks Protocol
    2. 2021 ISDA Interest Rate Derivative Definitions
    3. Relying on CME Term SOFR in swap markets
  4. Impact on loans
    1. Timing of amendments and rate switch
    2. Next steps for loans that incorporated the ARRC recommended fallback provisions
    3. Basis risk
    4. Special considerations for hedged loans
  5. The Adjustable Interest Rate (LIBOR) Act
    1. Federal Reserve rules implementing LIBOR Act
    2. Preemption of state law
    3. The CFBP’s interim final rule amending Regulation Z to address the anticipated sunset of LIBOR
    4. Where are we in the transition process and what are the key focus areas?
    5. What do you need to know about the myriad of alternative rates?
    6. What should your clients consider in addressing the timing and process of amending legacy instruments?
    7. How does the Adjustable Interest Rate (LIBOR) Act address contracts without fallback provisions?
    8. What does the likely publication of synthetic LIBOR mean for loans not covered by the LIBOR Act?
    9. Impact on securities
    10. Impact on loans
  6. Synthetic LIBOR
  7. LSTA amendment forms
  8. Implementation challenges


The panel will review these and other key issues:

  • Where are we in the transition process and what are the key focus areas?
  • What do you need to know about the myriad of alternative rates?
  • What should your clients consider in addressing the backlog in amending legacy instruments?
  • How does the Adjustable Interest Rate (LIBOR) Act address contracts without fallback provisions?


Isaac, Cheryl
Cheryl L. Isaac

K&L Gates

Ms. Isaac advises a broad range of derivatives market participants - exchanges, financial institutions, asset managers,...  |  Read More

Patel, Nihal
Nihal Patel

Fried Frank Harris Shriver & Jacobson

Mr. Patel represents both financial institutions and buy-side market participants on regulatory and compliance issues...  |  Read More

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