Following the discontinuation of certain LIBOR and Euribor maturities and a review of benchmark provisions, on 12 November 2014 the LMA incorporated these “Benchmark Changes” into all its recommended forms of facility agreement including, after discussion with the ACT, the Investment
Grade Agreements.
Following on from this, on 18 November 2014 the ACT has published a Benchmarks Supplement to the ACT Borrower’s Guide to the LMA Loan Documentation for Investment Grade Borrowers (April 2013)
The supplement summarises the key features of the Benchmark Changes and provides comment on their implications for investment grade borrowers including:
- catering for the use of benchmarks other than LIBOR or Euribor;
- Contractually addressing the possibility of intra-day rate re-fixing;
- Ensuring that Reference Bank Rates, where applicable, are quoted on the same basis as the Screen Rates they are intended to replace; and
- Moving away from any assumption that inter-bank lending costs are an accurate representation of Lenders’ funding costs.
