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A&O advises HSBC Bank as Coordinator on new Risk Free Rate (RFR) loan facilities for GlaxoSmithKline plc

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Brown Greg
Greg Brown



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Dominique Crowley
Dominique Crowley

Senior Associate


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08 September 2020

Allen & Overy acted as lead counsel for HSBC Bank, as risk free rate coordinator, and a group of banks to successfully refinance two core revolving credit facilities for GlaxoSmithKline plc (GSK).

These facilities, which consist of a USD2.5 billion 364-day facility and a GBP1.9 billion multi-currency three-year facility, replace GSK’s existing revolving credit facilities and are provided by a total of 12 banks on a bilateral basis.

In anticipation of the cessation of the London Interbank Offered Rate (LIBOR), these are the first large scale credit facilities executed globally to be linked from the commencement date to both the Sterling Overnight Index Average (SONIA) and the Secured Overnight Financing Rate (SOFR) compounded in arrears. 

The loan agreements include fixed spread adjustment amounts for both SONIA and SOFR, which form a separate element of the composite interest rate. This approach helps GSK to avoid paying a higher all-in rate in the event of negative SONIA/SOFR. Interest periods have been set at one month, with a fixed spread adjustment reflecting the five-year historic median of spreads between the relevant LIBORs and SONIA and SOFR.

The facilities use a five business day lookback (also known as the ‘lag’ methodology) instead of the ‘observation shift’ methodology that had previously been used in other Risk Free Rate (RFR) transactions. This is to align with the latest UK and US regulatory and industry working group recommendations while achieving consistency across currencies and geographies.

Greg Brown, an Allen & Overy banking partner in London, commented: “This deal builds on the first-of-a-kind work that A&O has been delivering for our clients in this field, following on as it does from advising the lenders on the first syndicated loan transaction to incorporate RFRs and then on the first multicurrency syndicated loan to use RFRs.”

The Allen & Overy team in London was led by partner Greg Brown, supported by associate Dominique Crowley. Sidley Austin acted for GSK, led by partner David Howe.