Recent Developments In U.S. Leveraged Finance – November 2017

The fourth quarter of 2017 has given rise to at least three developments of interest to the U.S. leveraged lending community:  (1) the  taking of steps now to address the expected discontinuation of the London interbank offered rate (LIBOR) after 2021; (2) the Republican House tax plan proposal to limit the deductibility of interest on debt; and (3) the temporary procedural invalidation (and possible permanent rejection) of the U.S. Leveraged Lending Guidance.

Discontinuation of LIBOR after 2021

LIBOR is an interest rate at which banks in London are able to obtain unsecured funding for an agreed period and currency. LIBOR underpins trillions of dollars of financial contracts, including bonds, loans and derivatives. Past scandals associated with the setting of LIBOR prompted the administration of LIBOR to be moved from the British Bankers Association to its current administrator, Intercontinental Exchange, operating through ICE Benchmark Administration Limited -