In another step towards providing greater visibility of what is happening in respect of the transition away from LIBOR as a reference rate in the lending market, the Loan Market Association (LMA) has recently published details of syndicated and bilateral loans referencing risk free rates.
Over the course of the last year, there has been activity in both the bilateral and syndicated loan markets in terms of loans referencing RFRs. In particular, there have been loans referencing the sterling (SONIA), US dollar (SOFR) and Swiss franc (SARON) RFRs, demonstrating an appetite amongst some borrowers to start the transition away from LIBOR and providing a helpful guide for lenders and borrowers to consider in their own transition plans.
Whilst not fully comprehensive (as this is a private market), the table is based on publicly available information and seeks to raise awareness of RFR referencing loans by providing information on the conventions used.
In particular it sets out the following types of transactions which have been seen in the loan market to date:
(i) syndicated loans which reference LIBOR but contain an in-built switch mechanism to reference RFRs;
(ii) new bilateral loans referencing RFRs directly; and
(iii) legacy LIBOR referencing bilateral loans amended to reference RFRs.
Click here to read more and access the table which will be regularly updated.
We encourage lenders and borrowers to disclose transactions that have taken place referencing RFRs and the conventions used (to the extent not commercially sensitive) in order to help drive momentum, transparency and the development of conventions in the loan market.
Hopefully this in turn will encourage people to consider how they can reference the RFRs in their own transactions.
If you would like to provide information for inclusion in this table, please contact kam.mahil@lma.eu.com or sboyce@treasurers.org
