December 11, 2020 - While LIBOR loan origination still will end by December 31, 2021, USD LIBOR may continue to exist until June 30, 2023 for legacy products only. This is very good news for the tens of thousands of business loans that were expected to fall back from LIBOR to a replacement rate (likely SOFR) in a little more than a year. The reality is that there is substantial remediation work to be done on these tens of thousands of loans – nearly all of which would “fall back” using a not-so-seamless amendment approach – and the extension to mid-2023 gives the market time to get remediation done right. It is not a pass to ignore the problem for another year.
To help on this end, in November, the LSTA presented on the concept of loan portfolio remediation and then hosted a series of LIBOR Vendor Remediation Presentations, where vendors discussed how they could help lenders analyze their portfolios and understand i) which loans had fallback language in them and ii) the type of fallback language. Armed with this information – ideally in a digitized form – lenders could determine how they would remediate their portfolios and how they would vote on fallback amendments for each loan. While we now have more time, this work cannot stop. And so, the LSTA is making recordings of these presentations available here for Sellside and Buyside members.
For more information on the remediation issue, please contact firstname.lastname@example.org.