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ARTICLE · 27 JUNE 2019

The ARRC's Final Recommendations For New Fallbacks For LIBOR Securitizations

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On May 31, 2019, the Alternative Reference Rates Committee ("ARRC") published "ARRC Recommendations Regarding More Robust Fallback Language for New Issuances of LIBOR Securitizations"

United StatesFinance and Banking
James J. Antonopoulos
James J. Antonopoulos
Amanda Baker
Amanda Baker
Lindsay O'Neil
Lindsay O'Neil
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On May 31, 2019, the Alternative Reference Rates Committee ("ARRC") published "ARRC Recommendations Regarding More Robust Fallback Language for New Issuances of LIBOR Securitizations" ("ARRC Recommendations").1 The ARRC Recommendations include a definition of what constitutes a cessation of LIBOR and provide a "waterfall" of replacement rates to be used when LIBOR is no longer published or is no longer representative. The waterfall of spread adjustments, designed to adjust for the differences between the replacement rate and LIBOR, was also finalized, although the method of calculation for two of the adjustments has not yet been fully determined.

LIBOR Cessation Definitions

There are four "Benchmark Transition Events," the occurrence of any of which will trigger a move from LIBOR to the replacement rate.

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