The transition from U.S. dollar (USD) LIBOR to a more robust
reference rate is a necessity. The UK's Financial Conduct
Authority (FCA) is responsible for regulating LIBOR, and FCA Chief
Executive Andrew Bailey has made clear that the publication of
LIBOR is not guaranteed beyond 2021, so time is of the essence.
On July 16, 2020, the Loan Syndications and Trading Association
(LSTA) posted a summary of an analysis prepared by Covenant
review of 288 commercial loans made during the first quarter of
2020. This analysis shows that seven percent of the loan
documentations did not include any LIBOR fallback language.
While it is positive that 93% of the loans made in the first
quarter address the need for a LIBOR fallback, this analysis shows
that some market participants continue to ignore the impending
transition. The Alternative Reference Rates Committee (ARRC) has
indicated that starting September 30, 2020, it is best practice to
include a hardwired fallback (more on
