Interest provisions in risk-free rate based loan agreements
Interest provisions in risk-free rate based loan agreements

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Interest provisions in risk-free rate based loan agreements
  • Timetable for LIBOR transition
  • Using compounded RFRs—what has the LMA published?
  • Single currency RFR facilities agreements
  • Rate Switch Agreements
  • Multicurrency Compounded Rate/Term Rate Facilities Agreements
  • Standard form investment grade facilities agreements
  • Standard form developing markets facility agreement
  • Can the LMA compounded RFR facilities agreements be used on finance transactions other than investment grade?
  • Can the LMA compounded RFR facilities agreements be used on multicurrency transactions?
  • More...

Interest provisions in risk-free rate based loan agreements

This Practice Note aims to assist practitioners with understanding the key issues to be aware of when drafting or amending a facility agreement to be based on a compounded risk-free rate (RFR) such as SONIA or SOFR rather than LIBOR.

This Practice Note:

  1. explains the timetable for LIBOR transition in the loan market

  2. sets out the various compounded RFR based documents published by the Loan Market Association (LMA)

  3. sets out key points to note when amending a loan agreement to be based on a compounded RFR

  4. explains what is meant by a switch mechanism and discusses considerations relating to the triggers for the switch

  5. summarises the key features of loan agreements based on compounded RFRs and how the documents differ from LIBOR based loan agreements

  6. sets out a key points checklist for drafting an RFR-based facility agreement

  7. sets out key points to note when using a term RFR such as Term SONIA

For:

  1. a quick reference guide and answers to some frequently asked questions on the key issues on LIBOR transition, see Practice Note: LIBOR transition—glossary and FAQs

  2. detailed information on the transition to RFRs, including why transition is necessary and an explanation of key terms, see Practice Note: LIBOR transition, and

  3. a list of developments for each LIBOR currency in relation to the transition, see

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