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Ready to Replace LIBOR in Your Loans?

Ready to Replace LIBOR in Your Loans?
January 25, 2022 by Jason R. Berne, Partner
After December 31, 2021, United States banks regulators strongly encouraged banks to no longer issue LIBOR-based loans to commercial customers. However, existing LIBOR-based loans can remain in place until June 30, 2023. Many lenders are transitioning to the Secured Overnight Financing Rate or SOFR. However, other alternatives exist that attempt to index unsecured rates: American Financial Exchange (AFX) offers AMERIBOR, Bloomberg has its Short-Term Bank Yield Index (BSBY), and Intercontinental Exchange (ICE) is working on a Bank Yield Index.

If your company has a LIBOR-based loan, be prepared for your lender to propose a transition to an alternative rate in the coming months or in connection with your next refinancing. Now might be a good time to learn about which replacement rates are available and what rates your lender is likely to propose.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.


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