What are some transition issues that may need to be dealt with?
In current credit agreements, there exists market disruption provisions. This is a sufficient bridge to the loss of LIBOR and the decision to adopt the SOFR rate. These provisions provide that if either the LIBOR Screen rate is no longer available or the LIBOR Screen does not adequately cover banks’ cost of funds, then the LIBOR benchmark rate shall no longer be applicable. This video reviews what the replacement rate would calculate to be and discusses the path forward with new deals and fallback language.
Runtime: 19 minutes
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