A busy day for the LMA

A busy day for the LMA

The Loan Market Association (LMA) has published new drafting for LIBOR and benchmarks, amended all facility documentation, published explanatory notes on auditors, and delivered a new super senior facility agreement with high yield notes and an intercreditor agreement with user guides for the leveraged/high yield sector.

What are the key developments?

On 12 November 2014, the LMA published amendments to the majority of its facility agreements under English law (including relevant user guides and all intercreditor agreements) as well as explanatory notes on three main areas of change:

(a) changes to drafting on interest rates following:

  • the refixing and republishing arrangements for ICE LIBOR
  • the removal of certain currencies from ICE LIBOR, to allow for other benchmarks to be used, and
  • the publication of the LIBOR Code of Conduct, following which, confidentiality of reference bank rates will, from now on, be given to the agent

(b) imminent operational changes under EU Competition policy, which mean it will be unlawful for a lender or agent to stipulate which firm or person, or category of firm or person, may be appointed by a borrower or guarantor as its auditors, and

(c) administrative provisions including, expanded use of websites, fees for letters of credit and a notification of expiry of a letter of credit

The LMA also published a new facility agreement and user guide in the leveraged/high yield sector for a super senior facility with a high yield note together with an intercreditor agreement and user guide.

The following explanatory notes should be read by any lawyers involved in using any LMA facility agreement as a template for a transaction. These are all available to LMA members on the LMA website:

ICE LIBOR Error Policy and LMA facility documentation

This note explains how the new refixing of LIBOR will work on a particular day. At the moment the 11.00 am rate is published at 11.45am. If there is an error requiring refixing it has to be notified by 3pm at the latest and so a refixed LIBOR will be published by 4pm. This will give some lenders and agents a problem should they rely on the 11.00am rate or wait until after 3pm. The note provides drafting for the parties to opt out of the refixed republished rate and this drafting is now in the facility agreements.

LIBOR Code of Conduct and revised LMA facility agreeme

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