Notice of Change of Interest Rates based on USD LIBOR Payable with Respect to Derivatives Agreements with CoBank, ACB Outstanding After June 30, 2023

This notice relates to changes in the interest rate based upon US Dollar LIBOR (“LIBOR”) in connection with derivatives transactions with CoBank, ACB (“CoBank”) as counterparty. Your institution is receiving this notice because it has entered into one or more derivatives instruments with CoBank referencing LIBOR that mature after June 30, 2023 (the “Existing Trades”). Calculations of amounts that reference LIBOR under the Existing Trades will change due to the permanent cessation of LIBOR on June 30, 2023 (the “Permanent Cessation Date”). You should consult with your own legal, financial and tax advisors with respect to the impact of the cessation of LIBOR on such instruments and its upcoming replacement on your institution’s operations and cash flows, and on the value of its financial instruments, e.g., borrowings, loans, investments, derivatives, and other assets and liabilities that currently reference LIBOR.

On March 5, 2021, the Financial Conduct Authority, the United Kingdom regulatory supervisor of the administrator of LIBOR, announced in a public statement the future cessation of overnight and 1, 3, 6, and 12 month tenors of LIBOR published by the ICE Benchmark Administration (“IBA”) on the first London banking day after June 30, 2023. As a result of this IBA announcement and in accordance with the fallback mechanism set forth by the International Swaps and Derivatives Association (“ISDA”), references to LIBOR in the Existing Trades will be replaced with the Secured Overnight Financing Rate (“SOFR”) on the Permanent Cessation Date. This will automatically occur in one of three ways: (i)(a) the Existing Trades incorporate the 2006 Definitions, as amended to include Supplement 70 to those definitions and incorporate the above described fallback mechanism, or (b) the Existing Trades incorporate the ISDA 2021 Interest Rate Definitions, which also include such fallback mechanisms, (ii) you have entered into a bilateral amendment agreement with CoBank, or you adhere to the ISDA 2020 IBOR Fallbacks Protocol, each of which would amend your Existing Trades to incorporate such fallback mechanisms, or (iii) your Existing Trades would be amended by operation of law to incorporate such fallback mechanisms under the terms and conditions provided for by regulations promulgated by the Federal Reserve Board under the Adjustable Interest Rate Act (the “LIBOR Act”), Regulation ZZ.*

SOFR is based on a broad segment of the overnight repurchase market for direct obligations of the United States (“Treasuries”) and is a measure of the cost of borrowing cash overnight collateralized by Treasuries. Due to differences between LIBOR (an unsecured rate with various tenors) and SOFR (a secured, overnight rate), it was necessary to develop and apply a tenor (term) and credit adjustment that has been adopted by ISDA, other relevant trade organizations and the Federal Reserve Board in Regulation ZZ, to minimize, to the extent possible, the economic impact of a transition from LIBOR to SOFR. As part of the transition from LIBOR to SOFR, a standard adjustment spread will be added that will vary based upon the tenor of LIBOR being replaced. Set forth below are the various adjustment spreads by tenor. This spread is in addition to the spread, if any, to LIBOR included in the Existing Trades, which will not change as a result of the transition.

ISDA’s SOFR Spread Adjustment for USD LIBOR
Tenor Spread Tenor Spread Tenor Spread
1-day 0.00644% 2-month 0.18456% 6-month 0.42826%


0.03839% 3-month 0.26161% 12-month 0.71513%
1-month 0.11448%        

Your institution may or may not be disadvantaged economically as a result of the transition to SOFR. For example, the permanent cessation of LIBOR could adversely affect the value of and return on your institution’s Existing Trades and may result in a mismatch between SOFR and the fallback rate used in your institution’s loans with CoBank, including any syndicated loan that the Existing Trades are intended to hedge. Accordingly, your institution should review the terms of your Existing Trades and the related loans to determine if the amendments described herein will meet your institution’s financial and hedging objectives. Your institution should also consider the tax, accounting and regulatory implications of such amendments.

* Regulation ZZ is available at, and the LIBOR Act is available at