Selection of ESTER as the new euro risk-free rate
On 13 September 2018, the working group on euro risk-free rates recommended the euro short-term rate (ESTER) as the risk-free rate for the euro. ESTER will replace EONIA, which no longer meets the criteria of the EU Benchmarks Regulation ("BMR") and so will see its use restricted as of 1 January 2020. ESTER will also provide a basis for developing fallbacks for contracts referencing EURIBOR, as the compliance of its new hybrid methodology with the BMR will be assessed in 2019 (with no guarantee of a favourable outcome).
Consultations on LIBOR transition – industry responses required
Two important consultations on LIBOR transition were
launched in July 2018: (i) the Bank of England is seeking comments on the proposed
creation of term SONIA reference rates; and (ii) ISDA is seeking input on approaches
to addressing technical issues with adjustments to apply to fallbacks to risk
free rates. Whilst the LMA will look to respond to the consultations, we
encourage all market participants to submit responses directly to ensure the views
of the loan market are represented.
Click
here to view the BoE consultation (closes 26 October). Click here
to view ISDA's consultation (closes 22 October).
Recent LMA Submissions
LMA writes to HM Treasury in advance of UK transposition of MLD 5
LMA responds to Working Group on Sterling Risk-Free Reference Rates consultation on Term SONIA Reference Rates
LMA responds to BEIS Open Consultation: Draft Registration of Overseas Entities Bill
LMA launches Green Loan Principles (GLP)
The GLP have been developed by an experienced working party, consisting of representatives from leading financial institutions active in the green loan market, with a view to promoting the development and integrity of the green loan product.
LMA revisions to Chapter 17 of the JMLSG Guidance on the prevention of money laundering and the financing of terrorism in the UK financial services industry go live on JMLSG website
More than 12 months on from the publication of a consultation by JMLSG in 2017 on proposed revisions to Parts II and III of its guidance on the prevention of money laundering and the financing of terrorism in the UK financial services industry (the "Guidance"), Chapter 17, which relates specifically to syndicated lending and which has been re-written by the LMA, has now been approved and published by the JMLSG board.
We spoke to Edward Eyerman, Managing Director, Leveraged Finance, EMEA at Fitch Ratings following our 2018 Syndicated Loans Conference in London. Edward discusses credit covenant standards, how the leveraged market is performing in comparison to other risk assets and the changing investor base.
Recent LMA Documentation
LMA produces a Mezzanine mark-up of a Senior Facility Agreement for use on REF investment transactions
LMA publishes updated version of revised Replacement of Screen Rate clause
LMA Updates Secondary Documents to Account For The Revocation of The ERISA Fiduciary Rule
LMA Produces Supplementary Note on Documentary Implications of Brexit for LMA Facility Documentation
Updated Data Protection Privacy Notice (8 August 2018)
The LMA has made updates to its privacy notice to include references to two new additional service providers engaged by the LMA (Rackspace and Adestra). Click here to access the updated Privacy Notice.