Alerts Archive

LMA strengthens EURIBOR fallbacks – the single currency euro exposure drafts are now recommended forms

We are pleased to have published recommended form versions of our single currency euro exposure drafts with €STR-based fallbacks. The recommended forms have not substantively changed except for the incorporation of the drafting for the ISDA/Bloomberg EURIBOR-€STR Spread Adjustment. 

The publication of these recommended forms marks a significant milestone in the journey of implementing robust EURIBOR fallbacks in LMA documentation.  The publication of these forms will allow us to start the process of updating all LMA euro-referencing documents to incorporate robust EURIBOR fallbacks. The recommended form documents also include simplified temporary fallbacks, drafting for the Central Bank Rate Adjustment and incorporate the drafting for the ISDA/Bloomberg EURIBOR-€STR Spread Adjustment. These features will be incorporated across the suite of the LMA euro-referencing documentation.     

Most of the feedback we received was relevant to the Users Guide to the Interest Rate Provisions which has been updated to include further commentary to clarify:

• How the LMA documents are intended to reflect the two-tier waterfall in the Euro RFR Working Group’s EURIBOR fallback recommendations. 
• How the “Changes to reference rates clause” operates, its interaction with the rate switch provisions, triggers and impact of no agreement being reached. 
• That the LMA documentation is not intended to fulfil all the specific requirements of Article 118-bis of the Italian Consolidated Law on Banking.  Parties should take local law advice. 

The Users Guide has also been updated to incorporate the guidance on the ISDA/Bloomberg EURIBOR-€STR Spread Adjustment drafting and to reflect the fact that the multicurrency term €STR fallback exposure draft has been removed from the LMA website.  This has been done to avoid any confusion whilst that particular document is being updated.  This does not impact the multicurrency recommended forms. 

The Users Guide to the Recommended Form of Investment Grade Documents has also been updated to reflect the publication of the recommended forms. 

The list of updated documents referred to above can be found on our Documentation Hub using any of the keywords or full document names below:

• Investment Grade Euro Term and Revolving Facilities Agreement (Compounded €STR fallback)
• Investment Grade Euro Term and Revolving Facilities Agreement (Term €STR Fallback)
• Users Guide to the Interest Rate Provisions in the LMA Facility Agreements
• Users Guide to Investment Grade Documents