On April 25, 2019, the Alternative Reference Rates Committee (“ARRC”) published “ARRC Recommendations Regarding More Robust Fallback Language for New Issuances of LIBOR Floating Rate Notes” (“ARRC Recommendations”). The ARRC Recommendations resolved two key elements for LIBOR fallback language, and left some items to be resolved in the future. 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.
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