In drafting loan documents, banks frequently cite to an index rate as the source of the interest rate governing a particular loan. One of the most commonly cited rates is LIBOR. If your bank uses LIBOR as a benchmark rate in its loans, you may want to pay close attention to the source cited in your loan documents. We frequently see loan documents citing to “ICE Libor.” However, the Intercontinental Exchange (“ICE”) is a subscription based service, and only those banks that are members of ICE are entitled to directly quote ICE Libor. Accordingly, for banks that do not subscribe to ICE, quoting ICE Libor could potentially lead to liability. If you have questions about citing LIBOR as a benchmark rate or how to reduce this potential liability, please contact a member of Spencer Fane’s Financial Services group.
