Tag Archives: LIBOR
Understanding SOFR
In June 2023, the U.S. dollar London Inter-Bank Offered Rate (LIBOR) will likely be discontinued. The Alternative Reference Rates Committee has identified the Secured Overnight Funding Rate (SOFR) as the recommended alternative reference rate to replace USD LIBOR. SOFR is calculated as a volume-weighted median of transaction-level U.S. Treasury repurchase agreements data, reflecting borrowing cost…
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Market Updates on the LIBOR Transition
This year will be key in the London Inter-Bank Offered Rate (LIBOR) transition. After consultation on ending the publication of LIBOR in USD, GBP, EUR, CHF, and JPY, the administrator of LIBOR, the ICE Benchmark Administration (IBA), may announce its decision soon. The announcement of LIBOR cessation would trigger the spread adjustment to be fixed…
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Replacing LIBOR
LIBOR – the London Interbank Offered Rate — is the benchmark for over $300 trillion of loans, derivatives and other financial instruments. LIBOR started in the syndicated loan market of the 1960s; today it is quoted in different currencies and maturities. Following scandals in 2012-2013, LIBOR is being replaced and will disappear in 2021. For…
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Repricings Remain the Story of the Year for Leveraged Loans
Despite three interest rate hikes, record issuance, and a total market size climbing toward the USD 1 trillion mark, the dominating theme for loans in 2017 has been the massive amount of repricings that have occurred throughout the year. As detailed in an earlier blog post, leveraged loans pay a two-part coupon—a market-driven base rate…
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LIBOR at 1% for First Time in 7 Years – A Significant Level for Leveraged Loans
For the first time since May 2009, the three-month LIBOR reached 1% on Dec. 29, 2016. LIBOR, which stands for London InterBank Offered Rate, is a benchmark interest rate that most of the world’s largest banks charge each other for short-term loans. The most common rates for which LIBOR is quoted are for overnight, one-month,…
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