Clifford Chance

Negative interest rate benchmark implications under syndicated lending documentation

8 March 2015

Whilst this has not yet occurred with benchmark rates in Australia, negative interest rate benchmarks are not unknown. The European loan market first grappled with the issue in 2011 when Swiss Franc LIBOR was reported as negative in some circumstances.

Recent activity by European central banks has resulted in a preponderance of negative LIBORs for Swiss Francs and negative LIBORs and EURIBORs for Euro, sparking fresh concern about the potential effect on lending arrangements.

This briefing considers some of the key questions arising for lenders and borrowers in the syndicated loan market, and the implications of a negative interest rate benchmark under syndicated lending documentation.

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