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Freshfields advises AstraZeneca PLC on its new bilateral facilities incorporating a risk-free rate switch mechanism.

Freshfields Bruckhaus Deringer (“Freshfields”) has advised AstraZeneca PLC on its new dollar-denominated bilateral facilities with nine relationship banks for an aggregate amount of $3.375bn. The facilities each contain a switch mechanism effecting a switch from US$ LIBOR as the interest rate benchmark to compounded SOFR, on the earlier of certain trigger events and a date to be selected by AstraZeneca.  The switch mechanics and compounded SOFR provisions borrowed heavily from the LMA exposure draft rate switch agreement and the Sterling Working Group conventions.

Martin Hutchings, partner at Freshfields in London commented: “These facilities are an example of the ongoing focus of the loan market on the transition away from LIBOR. The approach to the use of risk-free rates is evolving at a fast pace given the impending cessation of LIBOR, the aim that there are no more LIBOR linked loans issued after Q1 2021 and the continuing development of systems and software to calculate interest based on risk free rates. These facilities include the most recent market conventions for SOFR in the UK market. We are delighted to have partnered our valued client AstraZeneca on this transaction at the forefront of a developing market.”

The Freshfields team was led by partner Martin Hutchings and senior associate Rosemary Lobley.


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