Happy New Year to all of our clients and friends! The close of 2021 allows us to put the challenging year behind us and be hopeful of the year ahead. 

As ever, January is an opportunity to set resolutions and undertake some spring cleaning – perhaps an ideal time to dust off your loan documents? The new year marked the immediate phasing out of the London Inter Bank Offered Rate (LIBOR), a benchmark rate that features in many financial products as an index to determine interest charged to customers. LIBOR can no longer be used in any new loan documents but is referenced in many existing loan documents. In many cases, the Sterling Overnight Index Average (SONIA) will be used as a substitute rate.

We appreciate this is a dry subject but recommend that businesses evaluate their loan documentation to see if it relies on LIBOR. The documentation may contain fallback wording, but this might reference an alternative benchmark rate at the discretion of the lender (rather than an official rate).

As with many legal documents the devil is in the detail, so if you are unsure, please reach out to Meridian and we can put you in touch with an appropriate advisor to ensure clarity and certainty moving into 2022.



Article written by Callum Larkin