Hardwired Approach

In a loan or other bilateral agreement, a fallback mechanism designed to replace, in a non-discretionary fashion, an interest rate in the event that the interest rate ceases publication prior to the term of the agreement.  For example, many U.S. dollar LIBOR loan agreements have added amendments for the rate to fall back to the secured overnight financing rate (SOFR) when U.S. dollar LIBOR ceases publication, without any further action on the part of the parties to the agreement.