New York is now taking a stab at improving the mechanisms available to sovereigns restructuring their debt. This comes as no surprise, because New York law governs approximately half of all sovereign bonds issued globally.
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By Aaron Nicodemus2021-04-09T16:00:00+01:00
A new law in New York provides contracts that reference the London Interbank Offered Rate (LIBOR) with a fallback provision and safe harbor once the benchmark interest rate permanently ceases to be published at the end of the year.
S297B, signed into law by Gov. Andrew Cuomo on Tuesday, allows for any contract governed by the state of New York to replace LIBOR with a “recommended benchmark replacement.”
The law says the recommended benchmark replacement shall be based on the Secured Overnight Financing Rate (SOFR) and have been recommended by the Federal Reserve Board; the Federal Reserve Bank of New York; or the Alternative Reference Rates Committee (ARRC) for the applicable type of contract, security, or instrument.