June 20, 2018 - As recent missives have suggested, considerable work on potential LIBOR succession is taking place. Helpfully, these efforts increasingly are being unveiled for public consumption. First, the Bank of England recently published a provisional timeline for SONIA, the Sterling Reference Rate. The timeline indicates there will be efforts to develop a term SONIA, which might be similar to term SOFR in the U.S. This is important because cash products like loans and securities need a term reference rate.

In addition, the U.S. Alternative Reference Rates Committee (“ARRC”) announced a public roundtable that will be held on Thursday, July 19, 2018. The roundtable will recap overall progress thus far in 2018, and will be a starting point in the ARRC’s public consultation and education regarding contract fallback language (i.e., how financial contracts should document a transition to a new reference rate if LIBOR were discontinued). In addition to a higher level perspective on ARRC work, the roundtable will drill into developments in contract language for FRNs, corporate loans, securitizations and derivatives.

The LSTA is a member of the U.S. Alternative Reference Rates Committee and co-chairs the ARRC business loans and CLOs committee. We are developing reference materials on our website (www.lsta.org), FAQs.   If we all work toward this, the transition can be done.