Last week, FASB announced that it issued a proposed Accounting Standards Update that would extend the period of time preparers can utilize the reference rate reform relief guidance and expand the Secured Overnight Financing Rate (SOFR)-based interest rates available as benchmark interest rates. Comments on the proposed ASU are requested by June 6, 2022.
The amendments in the proposed ASU would defer the sunset date from December 31, 2022, to December 31, 2024, reflecting the fact that in 2021, the UK Financial Conduct Authority delayed the intended cessation date of certain tenors of USD LIBOR to June 30, 2023. Further, based on the developments of a term-based version of the SOFR rate (SOFR term) in the marketplace, the proposed ASU would amend the definition of the SOFR Swap Rate to include other versions of SOFR, such as SOFR term, as a benchmark interest rate under ASU Topic 815, which deals with derivatives and hedging.
Our “Risk Factors” Practice Area includes memos about disclosing risks related to the LIBOR transition – and make sure to also check out memos about the transition in our “Debt Financings” Practice Area.
– Dave Lynn