In Parts 1 and 2 of this series, we discussed the circumstances that led to the planned phase-out of the London Inter-bank Offered Rate, commonly referred to as “LIBOR” and the proposed replacement rate known as the Secured Overnight Financing Rate (“SOFR”). In this last part of the series, we will present the proposed language recommended by the Alternative Reference Rate Committee (“ARRC”) to be used in new contracts that reference LIBOR.
In Part 1 of this series, we discussed the circumstances that have led to the planned phase-out of the London Inter-bank Offered Rate, commonly referred to as “LIBOR”. In this part of the series, we will discuss the proposed replacement rate referred to as the Secured Overnight Financing Rate (“SOFR”).
The widely publicized phase-out of the London Inter-bank Offered Rate (commonly referred to as LIBOR) has been cast as the most significant challenge facing global finance over the next several years. The Financial Conduct Authority’s (“FCA”) decision to end its oversight of LIBOR virtually guarantees LIBOR’s demise by the end of 2021.