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 IBORtransition 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
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
United States - Derivatives
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.
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.