March 21, 2024 - While the New York Stock Exchange and SIFMA declare Good Friday a holiday, the Federal Reserve Bank is open. Since Good Friday is also month /quarter end, it is a day on which typically new loan contracts are set and principal, interest and fee payments are made.   

Therein lies the issue.  

Delayed compensation accrues on loan market trades that do not settle within a set number of business days after the trade date. Business days do not include Saturdays, Sundays, or any day the Federal Reserve Bank of New York is closed. When making its holiday recommendations, the LSTA recognizes the New York Stock Exchange and the Federal Reserve Bank of New York holiday closings. The New York Stock Exchange will be closed on March 29th in observance of Good Friday. Therefore, the LSTA recommends treating Friday, March 29th, 2024, as a loan market holiday for purposes of calculating delayed compensation under the LSTA standard forms of trade confirmation.

However, while the LSTA acknowledges that it is difficult to settle trades when half of the market is on holiday, it recognizes that since the Federal Reserve Bank and the banks are open, principal, interest and fee payments can be made on March 29th. The question is: SHOULD they? The answer lies in the definition of Business Day within each applicable credit agreement. And you must read each applicable credit agreement!

The LSTA’s credit agreements define Business Day as “any day that is not a Saturday, Sunday or other day that is a legal holiday under the laws of the State of New York or is a day on which banking institutions in such state are authorized or required by Law to close”.  If this is the definition in your applicable credit agreement, then Good Friday is a Business Day for purposes of USD loans and their respective payments can be made on such day.  If, however, Business Day is defined to not include a day on which the New York Stock Exchange is closed or a day that SIFMA recommends as a holiday, then March 29th would not be a Business Day for purposes of USD loans and their respective payments should not be made on such day.   If, as it relates to any payment, determination, funding or notice to be made or given in connection with any loan or letter of credit denominated in a currency other than USD (Alternative Currency), then a Business Day is typically any day on which commercial banks and foreign exchange markets are open for business in New York City and the principal financial center for such Alternative Currency. Therefore, you must be aware of the holiday calendar for the jurisdiction in which the applicable Alternative Currency exists.  

In addition, note that if the payments are made on March 29th, then the new loan contract will begin on March 29th. A new SOFR Rate must be set. Term SOFR typically means: (a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day that is two U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator. Therefore, the rate for an interest period beginning on March 29th would be the rate set on March 27th. Again, please review your individual credit agreements to verify when a rate should be set.

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