New LIBOR-based lending ended as of December 31, 2021, in alignment with regulatory guidance and expectations.
Existing LIBOR-based loans will continue to be administered “as is” for now – but those that are scheduled to mature or will otherwise continue to exist after June 30, 2023 (LIBOR’s cessation date), require “remediation” to provide for the future replacement of the LIBOR-based rate with an alternative reference rate as of the time LIBOR is no longer published.
Stay up to date on M&T’s plan to remediate existing LIBOR loans and the reference rate options we offer – both for new Commercial loans and for converting existing LIBOR loans.
M&T Bank has a dedicated LIBOR Transition Office.
Understanding how the post-LIBOR lending environment impacts M&T Bank clients is important, and we are here to help you navigate your options. We have committed extensive resources to educate our personnel and develop best-in-class client solutions. We'll be sure to provide updates on the LIBOR transition from the Alternative Reference Rate Committee (ARRC), convened by the Federal Reserve Board and Federal Reserve Bank of New York, as well as guidance on its recommended alternative – the Secured Overnight Financing Rate (SOFR).
The information made publicly available via the resources referenced on this page are for informational purposes only, and should NOT be viewed or construed as legal, accounting, tax or other professional advice. Readers should consult with their own professional advisors to discuss any information provided herein. M&T Bank is not endorsing any third party sources cited herein, and makes no representations or warranties about the accuracy or completeness of any information contained herein.
If you have questions, contact your M&T Relationship Manager.
LIBOR Frequently Asked Questions
When is LIBOR going away?
New LIBOR-based lending ended as of December 31, 2021, in alignment with regulatory guidance and expectations. In most instances, existing LIBOR-based loans may continue to be administered through June 30, 2023, when LIBOR will no longer be published. Existing LIBOR-based loans that are scheduled to mature or will otherwise continue to exist after June 30, 2023 (LIBOR’s cessation date), require "remediation" to provide for the future replacement of the LIBOR-based rate with an alternative reference rate as of the time LIBOR is no longer published.
What rate options is M&T now offering for floating rate loans?
M&T currently offers Daily Simple SOFR, selected tenors of Term SOFR, and selected tenors of BSBY.
SOFR (Secured Overnight Financing Rate) was selected as a preferred alternative to US Dollar LIBOR by the Alternative Reference Rates Committee (ARRC). Daily Simple SOFR is underpinned by one of the deepest and most active financial markets in the world — the US Treasury repo market, which has more than $1 trillion in daily volume.
CME Term SOFR was endorsed by ARRC for 1-,3-, and 6-month tenors and provides an indication of the forward-looking measurement of overnight SOFR, based on market expectations implied from derivatives markets. In times of market stress, Term SOFR may behave differently than SOFR.
BSBY (Bloomberg Short-Term Bank Yield Index) is a reference rate calculated utilizing a variety of market transaction data that is collectively designed to measure the average short-term, unsecured borrowing costs of large international banks.
M&T’s Tenor Options:
- Daily Simple SOFR: Resets each day and offers rate flexibility – ideal for facilities that have frequent principal draws and repayments. Because the rate resets daily, the amount of interest due at the end of a monthly or quarterly payment period is not known until the end of the payment period.
- CME Term SOFR: M&T supports 1M Term SOFR with monthly or daily rate resets and 3M Term SOFR with quarterly rate resets.
- Monthly/Quarterly Rate Reset: These resetting frequencies offer the convenience of a term rate where the interest rate for the entire payment period is known at the beginning of the payment period.
- Daily Rate Reset: Recommended for use with some types of facilities that have frequent draws and payments. The amount of interest due at the end of a monthly or quarterly payment period is not known until the end of the payment period.
- BSBY: M&T offers BSBY–subject to a borrower suitability assessment– with 1-month (resetting monthly or daily) and 3-month (resetting quarterly) tenors.
Reach out to your Relationship Manager to learn more.
When and how will my M&T loan convert from a LIBOR-based rate to a replacement rate?
An existing LIBOR loan will cease to be a LIBOR loan when LIBOR no longer exists (i.e., after June 30, 2023). What happens to that loan depends on when the loan was originated and what, if any, remediation steps were taken prior to LIBOR cessation.
LIBOR loans with hardwired fallback language
- Loans with hardwired fallback language have a clear roadmap to replace LIBOR with an alternative reference rate (e.g., Term SOFR) upon the first interest rate reset following LIBOR’s cessation, which is currently set for June 30, 2023.
- Many newer LIBOR loans were originated with hardwired fallback language that addresses LIBOR cessation in the original loan documents.
LIBOR loans without hardwired fallback language
- Older loans (or any LIBOR-based loan without robust hardwired fallback language) must be amended to include hardwired fallback language addressing LIBOR cessation. M&T has been reaching out to Commercial clients with impacted legacy LIBOR loans to amend the loan documents accordingly. This process will be ongoing throughout 2022.
- If your impacted legacy LIBOR loan has not been amended to include hardwired fallback language prior to LIBOR cessation, your loan rate will likely convert to a Prime-based rate (as per the terms of your legacy loan documents) upon the first interest rate reset following LIBOR’s cessation (scheduled for June 2023). This may result in a rate increase.
- To achieve an outcome that more closely preserves the economics of the loan, your loan documents must be amended to either (a) convert immediately to an alternative reference rate, or (b) include M&T’s standard hardwired fallback language that will provide for an automatic future conversion to an alternative reference rate following LIBOR’s discontinuance.
Note on LIBOR loans hedged with an Interest Rate Derivative
- If your existing LIBOR loan is hedged (with a swap, cap, collar, etc.), your hedging agreement will also need to be amended to incorporate LIBOR fallback language. This can be accomplished by adhering to the ISDA 2020 IBOR Fallbacks Protocol, which effectively incorporates a hardwired fallback to a replacement index and rate. M&T has already adhered to the Protocol. You should consider doing so as well – after consulting with your own legal, tax, financing, and accounting advisors.
Can I modify an existing LIBOR-based facility?
Ordinary course amendments to existing LIBOR loans are permitted. However, in accordance with regulatory guidance, certain substantive modifications (e.g., changing the loan amount or term) will require that the LIBOR rate be replaced with an alternative reference rate (e.g., Term SOFR) at the time of the modification.
This guidance applies even if the existing LIBOR-based facility includes hardwired fallback language. At the time the relevant modification is executed, the reference rate will be replaced and, therefore, no conversion will be necessary upon LIBOR cessation in June 2023.
Reach out to your Relationship Manager to learn more.
Additional ARRC Resources
- Transition Key Message
- Background on USD LIBOR
- ARRC Issues Statement on Recommended Fallbacks
- How SOFR Works
- SOFR Best Practices
You can expect to continue to hear more from M&T Bank and your Relationship Manager.