ARRC Issues Guiding Principles for Transitioning Contracts from Libor

The Alternative Reference Rates Committee today issued a set of guiding principles for the development of fallback language for new financial contracts for loans, securitizations and floating rate notes to ensure that these contracts will continue to be effective in the event that U.S. dollar Libor ceases to be published. The principles are intended for voluntary use by market participants as they begin to reformulate potential contract language.

The ARRC issued the principles as part of its ongoing effort to minimize the risks and disruptions that could be associated with a potential end to Libor. The U.K.-based Financial Conduct Authority announced last year that it would sustain Libor through the end of 2021, but its future beyond that date is uncertain. The principles will be among the topics discussed at a public roundtable hosted by the ARRC on July 19.