Adjustable Interest Rate (LIBOR) Act Changes
On March 15, 2022, President Biden signed the Consolidated Appropriations Act of 2022 into law, which includes the Adjustable Interest Rate (LIBOR) Act. The (LIBOR) Act “provides for the transition of certain financial contracts away from the London Interbank Offered Rate (LIBOR), a reference interest rate based upon the lending terms certain banks offer to each other for various lengths of time.
LIBOR is set to be retired in 2023. Various financial contracts reference LIBOR as a benchmark for prevailing interest rates and use LIBOR in calculating certain payments or obligations. In the event a contract referencing LIBOR does not have a fallback or replacement rate provision in effect when LIBOR is retired, or a replacement rate is not selected by a determining person as defined by the bill, the bill provides for a transition to a replacement rate selected by the Board of Governors of the Federal Reserve System. The (LIBOR) Act also provides for conforming changes to these contracts, the continuity and enforceability of these contracts, and protections against liability as a result of such a transition.”
Summary: H.R.4616 — 117th Congress (2021-2022)
“Our Southern AgCredit team has worked diligently over the past two years to transition our LIBOR indexed loans to other variable and fixed loan rate products. We are pleased to have the additional assurances and guidance from congress regarding the financial market’s transition away from the LIBOR index.”Phillip Morgan, Southern AgCredit Chief Executive Officer