United States: It's Here! The ARRC Formally Recommends CME Group's SOFR Term Rate

On 29 July 2021, the Alternative Reference Rates Committee formally recommended the forward-looking SOFR term rates published by CME Group. As reported in our earlier blog post, Almost Time for Term SOFR, the rate is recommended for use in business loans, as well as the related hedges and securitizations (notably for CLOs).

ARRC Chairman, Tom Wipf, stated that the formal recommendation concludes the ARRC's Paced Transition Plan. Randal Quarles, Fed Vice Chairman for Supervision and Financial Stability Board Chair, added, "All firms should be moving quickly to meet our supervisory guidance advising them to end new use of LIBOR this year."

Supporting its SOFR term rate recommendation, the ARRC previously published on 21 July 2021 Forward Looking Term SOFR and SOFR Averages (Applied in Advance) Conventions for Syndicated and Bilateral Business Loans and ARRC Best Practice Recommendations Related to Scope of Use of the Term Rate, and on 29 July 2021 published a factsheet-ARRC Formally Recommends a Forward-Looking SOFR Term Rate-that outlines key transition steps and upcoming milestones and summarizes SOFR's strengths.

December 2021 is in sight.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2020. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.