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Ford Motor Credit is among the first ABS issuers to backstop the impending demise of U.S.-dollar Libor with a Fed-endorsed SOFR term rate, since a Fed working committee finalized voluntary guidance on a benchmark replacement.
The Mortgage Bankers Association created a template for originators to notify new borrowers when their adjustable-rate mortgage switches to a different index once publication of the London interbank offered rate discontinues.
Commercial and multifamily mortgage lenders need to figure out their plan for replacing the London interbank offered rate index potentially expiring at the end of 2021.
Covenant Review says a private issuer has gone to market with what is believed to be the first syndicated-loan deal that proposes to adopt the Federal Reserve’s Secured Overnight Funding Rate benchmark under Libor's demise. The proposal falls in line with recent recommendations for banks and issuers by a Fed working committee.
Although Libor will will not be phased out until at least 2021, Randal Quarles said making the switch early is "consistent with prudent risk management."
