On March 15, 2022, President Biden signed the Adjustable Interest Rate (LIBOR) Act into law (the "LIBOR Act").1 The LIBOR Act provides a clear and uniform federal solution.
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This is an update to a previous post. This update highlights the formal endorsement of Term SOFR by the ARRC, expands the discussion to include Ameribor and dives more deeply into the issues associated with Term SOFR swaps resulting in a mismatch with any related hedge by the Lender.
The ARRC has endorsed (HERE) CME’s Term SOFR. One of the bigger pieces to this announcement and earlier related announcements (Scope of Use Cases), is that U.S. regulators will also permit Term SOFR Swaps, when one of the parties is an “end-user”. When looking only at the loan market, what new reference rate will be the most common? Term SOFR, BSBY, Ameribor or one of the other SOFR rates? A few thoughts below, but at this point I think Lenders need to begin considering how rate options for their loan (e.g., how rates are different, advantages, disadvantages) will be discussed with Borrowers. We have worked with clients to develop guida
In what may be the first step in a move away from the Secured Overnight Financing Rate (SOFR) as the replacement rate for LIBOR, the Loan Syndications & Trading Association (LSTA).