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ARRC Recommends SOFR Conventions for Intercompany Loans

The Alternative Reference Rates Committee ("ARRC") recommended methods for referencing the Secured Overnight Financing Rate ("SOFR") in intercompany loans issued by nonfinancial corporations.

The recommendations are for the use of 30- or 90-day Average SOFR set in advance, with a monthly, quarterly, semi-annual, annual or other appropriate reset period. The ARRC highlighted benefits of the 30- and 90-day Average SOFR, including (i) that it is highly robust and easily communicable, (ii) it is compatible with the current system for intercompany loans and (iii) that it can be used immediately for a range of currencies.

Primary Sources

  1. ARRC Press Release: ARRC Releases Conventions for SOFR-Based Intercompany Loans to Support Non-financial Corporations Through the LIBOR Transition
  2. ARRC Report: Recommendation for SOFR-Based Intercompany Loans

Tags

Regulated Products
Indices
Body of Law
Contracts
Jurisdiction
US - Federal
Organization
Trade / Industry Associations
Sub-Author
ARRC