April 13, 2021 - The LSTA has published an advisory which addresses adding a “credit sensitive rate” option as part of the LIBOR fallback language included in syndicated loan and bilateral loan documentation.

This advisory provides sample language developed by the LSTA in collaboration with a working group of its sell-side and buy-side members to facilitate the use of credit sensitive rates in hardwired fallback language for members who are interested in incorporating a credit sensitive rate option. The LSTA is providing this language in light of the interest shown by a significant number of LSTA members in credit sensitive rates that are emerging and member requests for documentation that can account for and accommodate such rates, as well as the opportunity credit sensitive rates now have to develop as viable replacements for LIBOR given that June 30, 2023 is the expected cessation date for the most widely used tenors of USD LIBOR for legacy transactions. The LSTA remains committed to facilitating the implementation and use of all viable fallback rate options and its provision of this language complements the LSTA’s previous work to operationalize and implement SOFR-based variants.