Exhibit 8.1
EXECUTION VERSION
Discover Funding LLC
800 Prides Crossing, Suite 100
Newark, Delaware 19713
NOTICE OF LIBOR REPLACEMENT
June 20, 2023
U.S. Bank Trust Company, National Association,
as Indenture Trustee
190 S. LaSalle Street, 7th Floor
Chicago, IL 60603
Attention: Corporate Trust Office
Re: $925,000,000 Class A(2017-5) DiscoverSeries Notes (the “Notes”)
To whom it may concern:
Reference is made to that certain: Terms Document, dated as of June 30, 2017 (as amended or supplemented, the “Terms Document”), by and between Discover Card Execution Note Trust, a statutory trust created under the laws of the State of Delaware (the “Issuer”) and U.S. Bank Trust Company, National Association (successor to U.S. Bank National Association), as indenture trustee (the “Indenture Trustee”), to Second Amended and Restated Indenture Supplement, dated as of December 22, 2015 (as amended or supplemented, the “Indenture Supplement”), for the DiscoverSeries Notes, by and between the Issuer and the Indenture Trustee, to Amended and Restated Indenture, dated as of December 22, 2015 (as amended or supplemented, the “Master Indenture” and together with the Terms Document and the Indenture Supplement, the “Operative Documents”), by and between the Issuer and the Indenture Trustee, each pertaining to the above-captioned Notes.
ICE Benchmark Administration (“IBA”) will cease to quote certain tenors (including one-month tenors) of the London interbank offered rate (“LIBOR”) for United States dollars after June 30, 2023. The Operative Documents provide that the interest rate on the Notes is determined by reference to LIBOR for one-month United States dollar deposits, as appearing on Reuters Screen LIBOR01 as of 11:00 a.m., London time, on the applicable day.
In response to the announcement by IBA, the United States Congress passed the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Act”) and, in connection therewith, the Board of Governors of the Federal Reserve System (the “Board”) issued the Regulation Implementing the LIBOR Act, as published in the Federal Register on January 26, 2023 (the “Final Regulations”).
Section 253.3(a)(ii) of the Final Regulations provides that for certain agreements that contain fallback provisions that neither identify a specific benchmark replacement nor a determining person the interest rate on the debt instruments subject to that agreement will automatically change after June 30, 2023 by replacing LIBOR with a rate equal to the sum of (a) the applicable Board-selected benchmark replacement and (b) a spread adjustment.
Pursuant to Section 253.4(b)(1)(ii) of the Final Regulations, the benchmark replacement in place of one-month LIBOR tenors shall be CME Term SOFR plus the applicable tenor spread adjustment set forth in Section 253.4(c)(2) of the Final Regulations (which is 0.11448% for one-month LIBOR). CME Term SOFR is published by CME Group Benchmark Administration, Ltd. as indicative forward-looking measurements of the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York.
Each of the LIBOR Act and the Final Regulations applies to the Operative Documents for the Notes and, as a result, Discover Bank, as Calculation Agent, hereby notifies you that for the first setting of the interest rate for the Notes occurring after June 30, 2023 and each setting of the interest rate thereafter, the interest rate applicable to the Notes shall be calculated by substituting, in lieu of LIBOR, the sum of (i) CME Term SOFR plus (ii) 0.11448% (such sum, the “New Index”). In accordance with Section 253.3(a)(2), as a result of LIBOR being discontinued, Discover Bank, as Calculation Agent, will have no obligation after June 30, 2023 to set the interest rate on the Notes in accordance with the Operative Documents at the most recent determined LIBOR rate.
Discover Bank, as Calculation Agent, hereby instructs the Indenture Trustee to provide such notice to each registered Noteholder pursuant to the communication pathways established by The Depository Trust Company in order to communicate the replacement of LIBOR with the New Index in accordance with the foregoing paragraph to each Noteholder.
Should you have any questions or concerns with respect to the information contained in this notice, please reach out to Alfredo Agra, Director, at 302-323-7458 or alfredoagra@discover.com. Please acknowledge this notice and its contents by signing below and email a copy to the foregoing email address.
| Sincerely, | ||
| Discover Bank | ||
| By: | /s/ Patricia S. Hall | |
| Name: | Patricia S. Hall | |
| Title: Vice President, Chief Financial Officer and Treasurer | ||
Acknowledged by:
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
Not in its individual capacity, but solely as Indenture Trustee
| By: | /s/ Christopher J. Nuxoll | |
| Name: | Christopher J. Nuxoll | |
| Title: | Vice President |
