Legal Update: Fallback Language In The Context Of Benchmark Rate Reform

The proposed phase out of LIBOR is a topic that has triggered significant discussion within the business community this year, as regulators, financial institutions, borrowers, lawyers and members of the larger business community alike work on finding alternative benchmarks to avoid any potential disruptions that may result from such phase out.

The London Interbank Offered Rate or "LIBOR" is a benchmark rate representing the average interest rate at which banks on the London market can borrow unsecured funding from one another for a variety of maturity periods ranging from overnight to 12 months. LIBOR is used globally in the calculation of interest rates for a wide range of financial transactions. Reports published in 2018 suggest that its phase out could disrupt anywhere from USD 200 trillion¹ to USD 350 trillion² of outstanding contracts of various types.