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ARTICLE · 25 AUGUST 2020

Documenting SOFR Loans: 8 Things For Borrowers To Think About

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Bankers, lawyers and others involved in the loan market's transition from LIBOR to another reference rate have spent much of the past two years thinking about and drafting fallback provisions.

United StatesFinance and Banking
David Duffee
David Duffee
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Bankers, lawyers and others involved in the loan market's transition from LIBOR to another reference rate have spent much of the past two years thinking about and drafting fallback provisions-the section of a loan agreement that describes what happens if LIBOR is not available. Now that the likely disappearance of LIBOR is less than a year and a half away, and the Alternative Reference Rates Committee (ARRC) has identified the Secured Overnight Financing Rate (SOFR) as the likely successor to US dollar LIBOR, market participants are spending more time thinking about how to document loans that provide for interest accruing at a rate based on SOFR.

There are not many sources of guidance for developing SOFR loan documentation, but here are a few:

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