Of course, for a lender for which it is an option, the offer of a risk-free interest rate facility from day one is likely to be attractive, as this facility would not require further work related to the libOR transition. Risk projects are single-currency facility agreements based on the cumulative average of the PSR calculated on the basis of an observation period beginning before the start of an interest rate period and ending before the end. This approach is in line with the return to the market, as well as with the evolution of the market for variable rate quotes with reference SONIA and SOFR. The publication of exposure drafts is not intended as a recommendation for some form of calculation of the average by the AML. The LMA continues to commit to developing long-term interest rates on ORPs and continues to play its role in cash markets, particularly credit markets. However, the LMA is aware that no such forward-looking forward interest rate has yet been developed and that there may be a need and/or market demand for syndicated loans based on the ORPs themselves. (a) the regulatory rules that may apply to a lender with respect to the provision of the facility in question; for example, there were two mechanisms commonly used to calculate compound PROs a few days before the interest payment date, to ensure that the lender/agent could calculate the interest payable before the interest payment date and adequately inform the borrower of the amount of interest he or she must pay. These mechanisms are “Lookback without observational lag” (or “Lag”) and “Lookback with observation displacement.” The agreement on the exposure project for rate change is based on the “Lookback without Observation Shift” method (in accordance with the recommendation of the sterling working group). How these two mechanisms work is economically unlikely. However, the calculations and methodology behind the different calculations work differently.

This must, of course, be reflected in the detailed development of a facility agreement, as well as in a lender`s internal credit management systems and processes. We have published a note entitled “Documentary implications of the end of the Brexit transition period for LMA facility Documentation” which consolidated and updated previous Brexit notes published in September 2016 and April 2019, as well as two EU legislative benchmarks.