Yield Loss and Voting Issues With Loans

  • Yield loss could arise due to the mismatch between the LIBOR and SOFR floors. From a lender’s perspective, the fallback adjustment may not be sufficient when taking into account of corresponding interest rate floors.
  • Lenders should consider the potential inter-lender voting issue if they have not included a transition language as LIBOR transition approaches. Lenders participating in broadly syndicated loans should consider how to address the LIBOR transition in their loan documents and what consents would be required to do so