ARRC Releases Conventions for SOFR-Based Intercompany Loans

The Alternative Reference Rates Committee today issued recommendations for intercompany loans based on the Secured Overnight Financing Rate, the ARRC’s preferred replacement for the London Interbank Offered Rate. Certain tenors of Libor are scheduled to be discontinued by the end of this year.

The ARRC recommended that new SOFR-based intercompany loans use the 30- or 90-day average SOFR set in advance, with a monthly, quarterly, semi-annual, annual, or other reset period as is determined appropriate by the firm.