Market Trends 2022: Benchmark Rate Floor Provisions

Summary

This practice note discusses benchmark rate floor provisions, including current market trends in publicly filed credit agreements and commitment letters through August 31, 2022. Lenders tended to increase interest rate floor percentages in 2020 during the height of COVID-19 in response to the dropping LIBOR benchmark rate. With the replacement of LIBOR as a benchmark rate with SOFR in new credit agreements and the recent increases in interest rates by the Federal Reserve Board, SOFR loans have fallen back closer to the norm of 0%.