Welcome to the latest issue of Mayer Brown’s IBOR Transition Digest—a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates. As attention to IBOR transition accelerates and becomes more focused, it is critical to have access to comprehensive and timely resources about the market.
For additional resources and an introduction to our global cross-practice IBOR Transition Task Force, please visit Mayer Brown’s IBOR Transition portal.
Documenting SOFR Loans : 8 Things for Borrowers to Think About
Legal Update, 24 August 2020
Now that the likely disappearance of LIBOR is less than a year and a half away, and the Alternative Reference Rates Committee has identified the Secured Overnight Financing Rate (SOFR) as the likely successor to US dollar LIBOR, market participants are thinking about how to document loans that provide for interest accruing at a rate based on SOFR. We present a list of terms that may be proposed by borrowers in the negotiation of a SOFR credit agreement and, in a syndicated financing, may be the subject of possible disagreement among lenders.
NEWS AND DEVELOPMENTS
ARRC Recommended Best Practices for Completing the Transition from LIBOR
ARRC, 19 August 2020 update of 27 May 2020 publication
The ARRC has updated its LIBOR transition best practices to recommend, as a priority, that derivatives market participants adhere to the ISDA IBOR Fallback Protocol as promptly as possible, and preferably during the two-week “in escrow” period prior to the official launch of the Protocol (and its companion IBOR Fallback Supplement), in order to promote timely adoption by the market.
United States – Consumer Loans
LIBOR ARM Transition Resource Guide
ARRC, 18 August 2020
The ARRC’s collection of voluntary recommendations, tools, and other resources to assist market participants in transitioning residential LIBOR-based Adjustable Rate Mortgages, including home equity products, to a new index upon LIBOR cessation. It contains resources including readiness timelines, action items by market participant type, and a library of published guidance.
LIBOR-Based Private Student Loan Transition Resource Guide
ARRC, 18 August 2020
Similar to the ARM Transition Resource Guide, the ARRC presents a collection of voluntary recommendations, tools, and other resources to assist market participants in transitioning LIBOR-based variable rate private student loans to a new index upon the cessation of LIBOR. It contains resources similar to the ARM Guide, and focuses on key external and internal milestones that market participants should consider immediately, as well as the effects of transition by participant type.
Asia - Derivatives
Letter to Member Banks and Institutions re Adherence to the ISDA IBOR Fallback Protocol
ABS/SC-STS, 18 August 2020
Letter to all members of the Association of Banks in Singapore, recommending that member firms start planning immediately to adhere to the ISDA IBOR Fallback Supplement and the IBOR Fallback Protocol, which will be launched soon, and encouraging adoption during the “in escrow” period preceding official launch.
RECENT AND UPCOMING EVENTS
Libor Transition: It’s Later Than You Think! Part 1
LIBOR Transition Webinar Series, 10 August 2020
Mayer Brown partner Oral Pottinger and Christopher Cahn of Morae Global present the first 5 of 10 action items market participants should take in the next 100 days to ensure a solid foundation for a successful IBOR transition strategy.
Libor Transition: It’s Later Than You Think! Part 2
LIBOR Transition Webinar Series, 17 August 2020
Oral Pottinger and Christopher Cahn complete their discussion of the 10 action items market participants should take in the next 100 days to ensure a solid foundation for a successful IBOR transition strategy.
Libor Transition: Issues Impacting Floating Rate Notes, Preferred Stock, Depositary Shares, and Capital Securities, Part 1
LIBOR Transition Webinar Series, 24 August 2020
Mayer Brown partners Anna Pinedo and Jerry Marlatt and Counsel Bradley Berman focus on Floating Rate Notes and understanding legacy LIBOR FRN exposure, ARCC waterfall provisions for new FRNs and solutions for legacy FRNs.
Libor Transition: Issues Impacting Floating Rate Notes, Preferred Stock, Depositary Shares, and Capital Securities, Part 2
LIBOR Transition Webinar Series, 1 September 2020 at 4pm BST/11am EDT
Join Mayer Brown Partners Paul Forrester and Anna Pinedo for the second part of our LIBOR Transition Webinar Series presentation on the key LIBOR-related issues impacting Floating Rate Notes (FRNs), Preferred Stock, Depositary Shares, and Capital Securities, focusing on Preferred Stock, Depositary Shares, and Capital Securities.
Replays of all of our IBOR Transition Webinar Series presentations are available via iTunes podcasts, Google play or Spotify, as well as on our dedicated IBOR webpage: https://www.mayerbrown.com/en/capabilities/key-issues/ibor-transition?tab=overview.
What Investment Advisers Need to Know: GDPR, ESG, US Privacy & Cybersecurity and LIBOR
Mayer Brown 14th Annual Investment Management Regulatory University, 9 September 2020 at 12pm EDT
Please join Mayer Brown lawyers Stephanie Monaco, Leslie Cruz, Chris Chapman, Oliver Yaros, Paul Forrester and Jeff Taft at the second session of our Annual Investment Management Regulatory University, during which they will discuss, among other topics, “LIBOR: What is at stake with the world’s most important number going away on December 31, 2021, and are you ready?” CLE credit is pending for this event.