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ARTICLE · 06 JULY 2020

ARRC Updates LIBOR Fallback Language And Spread Adjustments For Cash Products

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The ARRC's recommendations include updated hardwired fallback language and an updated user's guide covering the updated fallback language and potential alternatives.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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On June 30, 2020, the Alternative Reference Rates Committee ("ARRC") published recommendations on fallback language for new originations of U.S. dollar-denominated syndicated business loans that reference LIBOR. The ARRC's recommendations include updated hardwired fallback language and an updated user's guide covering the updated fallback language and potential alternatives. The updated language expands upon the ARRC's previously recommended language by changing the second step of the benchmark replacement waterfall (which determines the replacement benchmark rate and spread adjustment in the event of a trigger event) from a compounded Secured Overnight Financing Rate ("SOFR") alternative to a daily simple SOFR, among other changes.

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