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LSTA Includes AMERIBOR® As A Credit-Sensitive Replacement to LIBOR

Date 20/04/2021

As part of an advisory issued on April 8, 2021 the Loans Syndications & Trading Association (LSTA) included AMERIBOR® as a fallback benchmark option following the discontinuation of Libor. A list of selected benchmarks and the full report is available in a market advisory for their membership titled the “’Credit Sensitive Rate’ Slot-in Rider for Fallback Language.”  

According to the LSTA advisory, “Credit sensitive rates have the opportunity to develop as viable replacements for LIBOR given that 30 June 2023 is the expected cessation date for the most widely used tenors of USD LIBOR for legacy transactions. The LSTA remains committed to facilitating the implementation and use of all viable fallback rate options and its provision of this language complements the LSTA’s previous work to operationalize and implement SOFRbased variants.” 

The LSTA advisory takes into consideration that new or amended loan documentation will have “robust fallback language that includes a clearly defined alternative reference rate after LIBOR’s discontinuation” according to the Federal Reserve’s and the OCC’s expectations and guidance.

“The LSTA advisory supports choice in the use of benchmarks and is key to the development of alternative rates following Libor’s end date,” AFX Chairman and CEO Dr. Richard L. Sandor said. 

The LSTA market advisory is available here: