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.


LEGAL UPDATE

That Already High Hurdle Looks a Little Higher as the US Credit Sensitivity Group Continues to Make Its Case for a More Credit-Sensitive Alternative to SOFR
Legal Update, 26 August 2020
The second meeting of the US regulator-convened Credit Sensitivity Group focused on the pros and cons of some US banks’ argument that a more credit-sensitive rate is required as an alternative to the proposed spread-adjusted SOFR. We summarize the presentations made by various Credit Sensitivity Group members at the July 22, 2020, meeting.

 

NEWS AND DEVELOPMENTS

United States – Syndicated and Bilateral Loans

ARRC Updated Recommendations Regarding More Robust Fallback Language for New Originations of LIBOR Bilateral Business Loans
ARRC, 27 August 2020
The refreshed bilateral business loan fallback language recommendations eliminate the Amendment Approach (in line with its Best Practices recommendations), update the “Hardwired Approach” to recommend the use of Daily Simple SOFR in the second step of the waterfall, and revise the “Hedged Loan Approach” to include a benchmark rate floor. ARRC recommends that new bilateral loans incorporate one of these two approaches not later than 31 October 2020 (30 September 2020 for syndicated loans).

Technical Reference Appendix to Syndicated Loan Conventions
ARRC, 27 August 2020
The appendix and its spreadsheets explain the difference between simple and compound SOFR, alternative lookback structures, and the operation of interest rate floors.

United States – Derivatives

CFTC Provides Additional Relief to Market Participants Transitioning from LIBOR
Commodity Futures Trading Commission, 31 August 2020
In response to feedback from the ARRC and other market participants, the Division of Swap Dealer and Intermediary Oversight, Division of Market Oversight, and Division of Clearing and Risk each issued revised no-action letters providing additional relief related to the transition from swaps that reference LIBOR and other IBORs to swaps that reference alternative benchmarks. Each revised letter outlines conditions under which counterparties will qualify for relief.

 

RECENT AND UPCOMING EVENTS

Replays of all of our IBOR Transition Webinar Series presentations are available via iTunes podcasts, Google play or Spotify, as well as on the IBOR Transition Webinar Series page of our dedicated IBOR Transition portal.

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.

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.

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.