Are you aware of the new changes to LIBOR?

If your business has a long term commercial financing agreement which sets the interest rates by reference to LIBOR you need to be aware that these rates will cease to exist from 31st December 2021.  It will be replaced in the UK by a new interest rate called SONIA.

This will be fundamentally different …the rates are compounded daily and it is not possible to predict the total cost of borrowings until the end of the term.

Many current loan agreements will have fall back provisions anticipating the end of LIBOR….many do not …in either event the terms will have to be converted or their meaning construed.

Many existing LIBOR based interest rate setting clauses do not make alternative provisions for the eventuality that LIBOR will no longer be available.  It is expected that those borrowers who proactively negotiate suitable alternatives with their lenders will be able to agree advantageous arrangements and avoid detrimental non-contractual default arrangements based on SONIA.

Jurit works with market leading experts to determine the best options and strategies for negotiation with banks on behalf of clients.