8.21.20
With the U.S. loan market slow to adopt SOFR, some financial firms are becoming wary that U.S. regulators will begin to conduct more oversight regarding firm’s plans to transition away from LIBOR. Over the past couple of months, regulators such as the Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) stated that they will begin conducting thorough reviews on a financial firm’s ability to prepare for discontinuation of LIBOR and adoption of an alternative reference rate. “Governmental bodies are aware there is a big block in the loan market – all these non-bank lenders – who need a push, and a push they are going to get from the SEC,” said Houlihan Lokey senior advisor David Wagner. A review by credit research firm Covenant Review of 288 new and amended institutional loans from the first half of 2020 found that none included ARRC hardwired language.