The fallback provisions recently proposed by the US Alternative Reference Rates Committee (“ARRC”) attempt to address two concerns for 2021: (a) chaos in the financial markets as participants attempt to incorporate the new SOFR-based reference rate into their lending transactions and (b) for transactions that are re-priced with a SOFR-based interest rate, the borrower paying an increased interest rate (and transferring value to the lender) or a lowered interest rate (and the lender transferring value to the borrower).

Please join Mayer Brown partner David Duffee as he discusses:

  • What the ARRC’s two proposed fallbacks—the “amendment approach” and the “hard-wired approach”—involve
  • How the fallbacks are structured to mitigate chaos in 2021
  • How the fallbacks address (or do not address) value transfer
  • How the regulators want the market to eliminate value transfer

Mayer Brown’s Global Financial Markets Initiative helps clients deal with the legal and business challenges resulting from the ongoing turbulence in worldwide financial markets. By mobilizing the firm’s global resources from multiple practices and offices, the initiative provides clients with knowledgeable and timely counsel on a broad spectrum of their legal needs.

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