To:   LSTA Membership  
Re:   LIBOR Transition – Amendment Fee Advisory           


The LSTA continues to work to ensure the corporate loan market sees a smooth and orderly transition away from LIBOR. Today the LSTA is publishing a market advisory to recommend that amendment transactions executed on or before June 30, 2021 that are intended solely to incorporate Alternative Reference Rates Committee (the “ARRC”) updated hardwired (or substantially similar) fallback language into existing credit agreements should not be accompanied by any amendment fee.

This non-binding recommendation is supported by the LSTA Board in recognition of the market benefit of reducing the number of amendment transactions that will need to come to market simultaneously at the end of 2021 transition period. One way to reduce the number of transactions requiring an amendment, either a consensual amendment or an amendment executed pursuant to amendment approach fallback language, at that point in time is to amend existing transactions that do not include hardwired fallback language to adopt the ARRC hardwired (or substantially similar) fallback language. Amending such credit agreements without an amendment fee will increase the incentive of borrowers to enter into such amendments in the first half of 2021, prior to any “amendment wave” that is likely to occur around LIBOR cessation/pre-cessation.

For current information about LIBOR transition, please join the LSTA’s weekly LIBOR Q&A call on Mondays at 3pm ET and refer to the LSTA’s LIBOR microsite.

Keep well and stay safe,

Sincerely,
Lee

 

Lee M Shaiman
Executive Director
OFFICE  212.880.3002 | CELL 201.396.0653
lshaiman@lsta.org