During the past month, the Alternative Reference Rates Committee (“ARRC”) has published its final recommendations for LIBOR fallback language for floating rate notes, syndicated loans, securitizations, and bilateral loans. Our Legal Update dated May 2, 2019, discussed the April 25, 2019, ARRC recommendations for new issuances of LIBOR floating rate notes (“FRN Recommendations”). On April 25, the ARRC also published its recommendations for syndicated loans, titled “ARRC Recommendations Regarding More Robust Fallback Language for New Originations of LIBOR Syndicated Loans” (“Syndicated Loan Recommendations”). The Syndicated Loan Recommendations are largely consistent with the FRN Recommendations, but differ in that the Syndicated Loan Recommendations offer two alternatives for LIBOR fallback language for syndicated loan products: the “Hardwired” approach and the “Amendment” approach. In this Legal Update we discuss those alternatives and how the Syndicated Loan Recommendations differ from the FRN Recommendations, and identify additional issues that lenders should consider.
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