The Drafting Jigsaw – LIBOR Reform and Forward-Looking Term Rates

Butterworths Journal of International Banking and Financial Law
November 2, 2021

Jacqueline Cook, Senior Knowledge Development Lawyer in the Trade & Export Finance team at Sullivan & Worcester in London, has authored “The Drafting Jigsaw - LIBOR Reform and forward-looking term rates” for the Butterworths Journal of International Banking and Financial Law, published in the October 2021 edition.

With certain sectors including trade and export finance, recognised by regulators as needing a forward-looking term rate, the article examines whether the drafting of finance documentation is just a cut and paste exercise or whether it is something more.

The implications will affect a wide range of finance documentation using nearly Risk Free Reference Rates (RFRs) – including the Sterling Overnight Index Average (SONIA), Secured Overnight Financing Rate (SOFR) and Euro Short Term Rate (ESTR) as benchmarks to replace LIBOR, and Jacqueline looks at how a borrower or a lender can start to piece together the drafting it needs for bespoke finance documentation.

Key points in the article on the LIBOR transition relating to drafting include:

"When it comes to LIBOR reform,” states Jacqueline in conclusion, "the market will see a range of wording in the next few years. Workable, pragmatic solutions achieved by dialogue between lenders and borrowers, with an eye on guidance from the regulators, are the most likely route to our new market “norms."

The article is reproduced with permission of Butterworths and can be accessed here.

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