Phaseout of LIBOR: Navigating the Final Stages, Implementing Alternative Reference Rates, and Fallback Language

A live 90-minute premium CLE video webinar with interactive Q&A


Tuesday, July 27, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

Early Registration Discount Deadline, Friday, July 2, 2021

or call 1-800-926-7926

This CLE webinar will discuss the scheduled phaseout of LIBOR (London Interbank Offered Rate) and outline steps real estate and commercial finance counsel must take now to review and consider amendments to existing floating rate loan documents. The panel will discuss the "hard" dates recently announced by IBA and FCA, alternative rates to LIBOR recommended by the Alternative Reference Rate Committee (ARRC), and best practices for incorporating alternative rate language into form documents.

Description

The transition away from LIBOR has taken on added urgency with the Mar. 5, 2021, announcement by UK and U.S. authorities regarding the dates when the publication of LIBOR will cease. Real estate and finance counsel must contemplate the phaseout when drafting loan documents and reviewing or amending existing loan documents.

The proposed U.S. replacement for U.S. dollar LIBOR is the Secured Overnight Financing Rate (SOFR), a broad-based Treasury repo financing rate recommended by the ARRC of the Federal Reserve Bank of New York (N.Y. Fed). The N.Y. Fed published overnight SOFR rates since April 2018, and in March 2020 began publishing compounded averages of SOFR over rolling 30-day, 90-day, and 180-day periods (the SOFR Averages), to better define the calculation of SOFR.

The ARRC has suggested two basic approaches to LIBOR fallback language: a "hardwired approach," which explicitly references variations on SOFR, and an "amendment approach," which refers to the then-existing market convention should LIBOR cease to be published. On Mar. 25, 2021, ARRC released supplemental recommendations for its hardwired language.

Counsel should review loan documents with a term beyond 2021 to ensure that fallback language is incorporated, along with appropriate triggers for switching to an alternative reference rate and the mechanics for how an alternative reference rate and related spread adjustment will be chosen. The recent announcements of hard phaseout dates may serve as a "trigger event" for documents that already contain fallback language.

Listen as our authoritative panel discusses the impact of the phaseout of LIBOR and the use of SOFR as a substitute rate and examines options for approaching the uncertainty surrounding the coming change. The panel will also discuss how ISDA is addressing the phaseout.

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Outline

  1. LIBOR: recently announced timeline for the phaseout
  2. Impact on floating rate transactions
  3. Impact on securitized loans
  4. Alternative reference rates: SOFR, others
  5. Recommended ARRC fallback provisions contemplating a change in reference rate under loan agreements
    1. Amendment approach
    2. Hardwired approach
    3. Supplemental recommendations made in response to "hard" end dates for LIBOR
  6. Impact on derivatives: ISDA adjustment provisions
  7. Recently passed NY legislation designed to smooth transition for certain legacy contracts

Benefits

The panel will review these and other key issues:

  • What is the timeline, and what kinds of transactions will be impacted by the phaseout of LIBOR?
  • What are the issues with alternative rate language currently contained in floating rate loan documents?
  • How should the floating rate forms be revised to address the phaseout given the current uncertainty as to the substitute rate?
  • What should counsel look for in ISDA agreements to confirm a suitable alternative rate?

Faculty

Pandozzi, Neal
Neal R. Pandozzi

Senior Counsel
Adler Pollock & Sheehan

Mr. Pandozzi is Co-Chair of the firm’s Public Finance group. He has drafted primary financing documents,...  |  Read More

Williams, Amy
Amy McDaniel Williams

Partner
Hunton Andrews Kurth

Ms. Williams is Chair of the firm’s Opinion Committee, Audit Response Committee and Ethics in Marketing...  |  Read More

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Early Discount (through 07/02/21)

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Early Discount (through 07/02/21)

You may pre-order a recording to listen at your convenience. Recordings are available 48 hours after the webinar. Strafford will process CLE credit for one person on each recording. All formats include program handouts.

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