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Course Details

Course Information
  • smart_display Format

    Live Online with Live Q&A

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Tuesday, May 20, 2025

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00

This CLE webinar will explore the recent developments and market conditions involving the use of the Secured Overnight Financing Rate (SOFR) – the approved benchmark fallback. The panel will generally provide insights on the current state and challenges and trends related to the transition to SOFR.

Faculty

Les Jacobowitz
Partner
ArentFox Schiff LLP

Mr. Jacobowitz has over 30 years of experience representing corporations (including not-for-profits), governmental issuers, underwriters, and financial institutions in domestic and international transactions. He has provided counsel on deals involving $25 billion or more, as well as restructurings and workouts of an additional $50 billion. Mr. Jacobowitz has worked with governmental entities, private companies, banks, investment banks and funds in all aspects of financing, including the lending, securitization, real estate, public finance, not-for-profit, health care, restructuring, energy & environment and infrastructure & privatization financing areas, and related litigation. He is also a prolific speaker and author on the threat and impact of the LIBOR transition and has successfully worked with clients to negotiate fair terms regarding the LIBOR transition so as to ensure economic equivalence in the transition.

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Kathryn G. Wellman
Member
Moore & Van Allen

Ms. Wellman’s investigations practice includes representation of financial institutions in inquiries involving the U.S. Department of Justice, the Office of the Comptroller of the Currency, the Federal Reserve, the U.K. Financial Conduct Authority, and financial regulators in other foreign countries. She has managed and coordinated internal reviews relating to systems and controls issues, including related to analysis of cross-border accounts for anti-money laundering and tax compliance issues. Her financial regulatory experience includes assisting clients with recovery and resolution planning, corporate governance matters, and other regulatory compliance issues. As part of that work, she manages the preparation of recovery and resolution planning governance playbooks for financial institution clients that guide actions and decision-making by the boards and senior management of their material entities, as well as responses to other regulatory inquiries and actions.

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Description

At the end of June 2023, the U.S. Dollar London InterBank Offered Rate (USD LIBOR), the primary benchmark rate used in the United States for loans, bonds, and swaps, ceased to be published on a representative basis, although 1-, 3-, and 6-month USD LIBOR continued to be published in synthetic form through the end of September 2024 for difficult to transition financial instruments.

In the years leading up to June 2023, lenders and swap providers worked to transition contracts away from USD LIBOR, with many unamended contracts transitioning via legislation in the U.S. or contractual fallbacks after June 2023.

Most contracts that previously used USD LIBOR now use SOFR, following the cessation of another benchmark rate that had replaced USD LIBOR, the Bloomberg Short-Term Bank Yield Index (BSBY), in mid-November 2024. SOFR is a broad measure of the cost of borrowing cash overnight as collateralized by U.S. Treasury securities and is considered a more reliable, stable, and transparent interest rate benchmark. Also, because SOFR is based on current market activity, it mitigates the risk of manipulation and other vulnerabilities that were present with LIBOR, which was based on the average of estimates provided by major banks of their costs to borrow from each other.

The Federal Reserve Bank of New York (New York Fed), as the administrator of SOFR, recently announced two modifications to the SOFR calculation methodology. These modifications were made to make SOFR more accurate and reliable. The modifications pertain to affiliated institutions and "specials" transactions within the centrally-cleared delivery-versus-payment (DVP) segment of the repo market, which is the largest of the three market segments incorporated into the SOFR calculation. In addition, there have been other recent developments relevant to SOFR, including the creation of a new reference rate committee sponsored by the New York Fed plus recent increased market volatility.

Listen as our authoritative panel discusses the latest developments and challenges with SOFR and provides insights on how the use of SOFR as the benchmark rate will continue to evolve over the course of the next several years.

Outline

  • Overview: How the transition from LIBOR to SOFR went and where are we now?
    • Regulatory background on LIBOR cessation
    • Transition paths including LIBOR Act, synthetic LIBOR, contractual fallbacks, and amendment
    • IRS regulations/guidance on tax consequences of transition
    • BSBY cessation
    • Documentation for LIBOR and BSBY transitions
  • SOFR benchmark rate
    • Term SOFR
    • Daily Simple SOFR
    • 30-Day/90-Day/180-Day Average SOFR
    • New York Fed's recent modifications to its SOFR calculation methodology
  • Risk management considerations when using SOFR
  • Drafting and negotiating SOFR terms in loan agreements
  • Hedging challenges
  • Other trends and developments
    • Creation of Reference Rate Use Committee (RRUC) following conclusion of Alternative Reference Rates Committee (ARRC)
    • Market volatility and divergence between Term SOFR, Daily Simple SOFR, and Average SOFR
    • Recent relevant UK case – Standard Chartered PLC v. Guaranty Nominees Limited and Ors [2024] EWHC 2605 (Comm)
  • Practitioner takeaways


Benefits

The panel will review these and other key considerations:

  • What are the key takeaways regarding the transition from LIBOR to SOFR?
  • What are the current issues and challenges with SOFR?
  • What are the hedging challenges and risk mitigation considerations in utilizing SOFR?
  • What are some drafting and negotiating considerations with SOFR as the benchmark rate for most loan agreements?