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According to Covenant Review, HPS Investment Partners is among the first CLO managers to plan on the use of a forward-looking SOFR term rate to price coupons if Libor benchmark rates disappear after 2021, as expected.
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."
CLOs, as well as student-loan and single-family rental ABS, face added risks to both issued notes and assets
The Federal Reserve’s Alternative Reference Rates Committee on Thursday released recommendations for language to enable contracts linked to the beleaguered Libor rate to work even if the benchmark disappears.
An industry working group might seek legislation to eliminate the need for investor consent in the shift to a new benchmark interest rate. But any legislative fix is almost certain to be challenged because choosing an alternative to Libor will inevitably favor one party in a transaction over another.
The Structured Finance Industry Group wants Treasury and the IRS to issue a notice that a change from Libor to an alternative index would not be treated as a taxable exchange.
From financing driverless cars to dealing with Libor's demise, here are the highlights from the Structured Finance Industry Group's annual conference.
Since most U.S. securities transactions are subject to New York law, it could be expedient to pass legislation defining Libor as SOFR plus a spread, says David Bowman, special adviser to the Fed.
Libor’s demise poses significant problems for outstanding floating-rate securities that are pegged to the benchmark; SFIG wants to make it easier to amend deals.
While the London interbank offered rate won't go dark until 2021, the commercial real estate finance industry should start preparing for the transition now, says the Mortgage Bankers Association.
An effort to increase awareness of the transition to a new benchmark rate, and nudge banks to start preparing, is expected to intensify in 2019.
They differ slightly from those released earlier by the Fed-convened ARRC, including language making it easier to ditch a SOFR-derived benchmark in favor of a new benchmark that has yet to be developed.
The Urban Institute's conclusion is based on estimates that one-year SOFR rates could be 25 to 50 basis points lower than the current Libor equivalent.
Fannie Mae has priced more securities that support a transition away from the London interbank offered rate.
Nearly 72% of attendees said their institutions were either only going to get involved “at the appropriate time” or “let the market figure out” how to move to a new benchmark.
Fannie Mae has issued securities supporting the transition away from the London interbank offered rate; something that could become more pressing for lenders if adjustable-rate mortgages were to become more prevalent.
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