Active transition away from LIBOR will be a key feature of market activity through the remainder of 2021. Slaughter and May in association with the Association of Corporate Treasurers have recently published a Borrower’s Guide to the Loan Market Association’s (LMA’s)recommended forms of facility agreement or loans referencing risk-free rates (RFRs).
The guide provides non-financial corporates in particular (and their lawyers) with an invaluable resource as they look to address the practicalities of transitioning away from LIBOR.
The guide is split into two main sections:
Part 1 addresses ‘LIBOR Transition Essentials’, providing: a brief background to RFRs and the UK’s approach to LIBOR transition in the loan market; the UK RFRWG’s recommended conventions for referencing RFRs in loans; and an overview of the LMA RFR templates.
This is recommended reading for anyone with loans currently referencing LIBOR.
Part 2 focuses on the details of the LMA recommended terms. It explains the key provisions of the facility agreement for multi-currency facilities referencing RFRs and/or term rates (the compounded/term MTR) and how the RFR terms differ from IBOR terms. It also highlights the provisions of the compounded/term MTR that borrowers might seek to adjust or negotiate.
The guide can be downloaded via the link above.
Further ACT resources on the LIBOR transition can be found here: treasurers.org/hub/technical/libor.