Moore & Van Allen (MVA) Financial Services Counsel Ed Ivey’s article, “The Future Dominant Reference Rate of the Loan Market: Will There Be One Rate to Rule Them All?”, was recently published by Thomson Reuter’s Futures & Derivatives Law Report.
In this article Ed provides his thoughts on (i) the developing loan and derivatives markets’ use of non-LIBOR interest rates, specifically Daily Simple SOFR, Term SOFR, BSBY and Ameribor and (ii) analysis and issues that Lenders and Borrowers may wish consider today when looking at entering into a loan referencing any of these ...
This is an update to a previous post. This update highlights the formal endorsement of Term SOFR by the ARRC, expands the discussion to include Ameribor and dives more deeply into the issues associated with Term SOFR swaps resulting in a mismatch with any related hedge by the Lender.
The ARRC has endorsed (HERE) CME’s Term SOFR. One of the bigger pieces to this announcement and earlier related announcements (Scope of Use Cases), is that U.S. regulators will also permit Term SOFR Swaps, when one of the parties is an “end-user”. When looking only at the loan market, what new reference ...
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