July 19, 2022 - On July 19, 2022, the Federal Reserve released a proposed rulemaking addressing a proposal that provides default fallbacks for domestic “tough legacy contracts” that do not have workable fallback language and that mature after June 30, 2023.  This proposed rulemaking would implement the LIBOR Act, which Congress enacted earlier this year. Consistent with the law, the proposal would replace references to LIBOR in certain contracts with the applicable Board-selected replacement rate – expected to be SOFR plus the ARRC spread adjustments – after June 30, 2023. This rulemaking, which was long anticipated, is not expected to materially affect domestic syndicated loans. Most US syndicated LIBOR loans either have workable fallback language or have an option to be priced off of Alternate Base Rate (Prime); in either case, this exempts these loans from the legislation and proposed rule.  While the legislation is unlikely to broadly affect domestic syndicated loans, the LSTA still plans to host a webcast later this summer to discuss how the rule would work.