LIBOR's Anticipated Discontinuation Leads To Focus On Replacement Language

The replacement of the London Inter-bank Offered Rate ("LIBOR") in contracts evidencing loan, derivative and other transactions with maturities extending beyond 2021 is a massive undertaking involving legal and compliance teams within companies operating in virtually every industry throughout the world.

A leader in that undertaking is the Alternative Reference Rates Committee ("ARRC"), which began its reference rate reform initiatives when it initially met on November 17, 2014. ARRC, sponsored by the Federal Reserve Board and the Federal Reserve Bank of New York, formally endorsed on June 22, 2017 the Secured Overnight Financing Rate ("SOFR") as its preferred benchmark to replace U.S. dollar denominated ("USD") LIBOR as a basis for calculations in certain transactions. SOFR, a benchmark based on overnight U.S. Treasury repo trade activity, was first published on April 3, 2018 by the Federal Reserve Bank of New York.