What does this Practice Note cover?

This Practice Note aims to assist practitioners with understanding interest provisions in Loan Market Association (LMA) recommended form facilities agreements.

This Practice Note:

1. •

   explains in brief what is meant by interest rate provisions in the context of a loan agreement

2. •

   provides an overview of the transition away from LIBOR

3. •

   explains the LMA’s approach in its documentation

4. •

   provides guidance on amending a loan agreement to be based on a risk-free rate

5. •

   explains what is meant by switch mechanisms and provides explanatory guidance on the switch mechanism in the LMA standard form facilities agreements

6. •

   discusses the key features of loan agreements based on compounded RFRs, and

7. •

   sets out a key points checklist for drafting a compounded RFR-based facility agreement

For:

1. •

   information about using term RFRs in a loan agreement, see Practice Note: Term risk free rates in loan agreements

2. •

   an introductory guide to interest in a facilities agreement, see Practice Note: Introductory guide to interest in loan agreements

3. •

   our LIBOR