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ARTICLE · 24 OCTOBER 2018

A New ARRC Consultation Addresses LIBOR Fallbacks For Floating Rate Notes

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For each cessation trigger and the steps in the two waterfalls above, the Consultation requests input from market participants as to their feasibility and other aspects.

United StatesFinance and Banking
Bradley Berman
Bradley Berman
Agustin Ferrari
Agustin Ferrari
Gonzalo Go
Gonzalo Go
Anna T. Pinedo
Anna T. Pinedo
Dr. Holger Schelling, LLM
Dr. Holger Schelling, LLM
Patrick Scholl
Patrick Scholl
Mingli Wu
Mingli Wu
Hanwen Zhang
Hanwen Zhang
Martín Estrada
Martín Estrada
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In September, the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of New York's Alternative Reference Rates Committee (the "ARRC") released a consultation proposing fallback language to be used in floating rate notes ("FRNs") linked to LIBOR if LIBOR ceases publication in 2021 (the "Consultation").1 As discussed in a prior issue of this publication, in its July 2018 Guiding Principles, the ARRC chose the secured overnight financing rate ("SOFR") as the "risk-free" replacement rate to be used when LIBOR is no longer available.2 The Consultation covers a number of areas, but this article focuses on proposed definitions of a LIBOR cessation and the proposed waterfalls of fallback rates and spread adjustments.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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