LIBOR Replacement Clause
(Amendment)

Summary

This LIBOR replacement clause (amendment) is used in credit agreements to outline the requirements for the adoption of a substitute benchmark interest rate upon the cessation of LIBOR. This template includes practical guidance, drafting notes, and alternate clauses. As of the end of 2021, the U.K.'s Financial Conduct Authority, the regulator overseeing the London Inter-Bank Offered Rate (LIBOR), no longer required banks to provide LIBOR estimates. Relatedly, the Ice Benchmark Association (IBA) ceased one-week and two-month USD LIBOR on December 31, 2021, with all remaining tenors of USD LIBOR to be terminated in June 2023, at which point LIBOR will cease to be the predominant interest rate benchmark. This means that LIBOR will not be a viable benchmark for loan transactions at that time. This LIBOR replacement clause (amendment) can be used to allow for a switch to an alternate interest rate (the front-runner for that distinction being the Secured Overnight Financing Rate (SOFR)). This...