Tick-tock. No, not the controversial social networking platform. That’s the sound of time slipping away on the existence of LIBOR. Regulated bank lenders are at varying stages in their transition to a new interest rate, with some even testing the waters originating new loans bearing interest based on SOFR. Non-bank lenders and asset managers are no less subject to the phase out of LIBOR, but for many the transition process is not quite so far along.
For those who missed it, our new partner, Anastasia Kaup, wrote an informative Alert outlining some of the developments in LIBOR transition over the summer and some of the developments yet to come. Since the summer, at least one syndicated loan has reportedly been originated using the ARRC recommended hardwired approach. However, it remains to be seen whether the rest of the market will follow or stick with the amendment approach and simply go straight to SOFR amendments. It’s still a bit early for SOFR amendments, but the LSTA is working on a sample for the syndicated loan market based on a form that Duane Morris developed. Our Alert highlights some of the LIBOR transition issues for non-bank lenders and asset managers to consider as we march towards the end of the year.