SOFR

The Treasury secretary suggested a role for lawmakers in containing any fallout with financial contracts stemming from the transition to a new interest rate benchmark.

Concerns over banks’ level of preparation have led to worries about disruptions in the lending market, and some financial institutions warn that a new interest rate benchmark could cause lenders to pull back on credit.

Executives sent a letter to the federal banking regulators last month expressing concern that an alternative to the London interbank offered rate could limit credit availability.

Investors and issuers understand Libor’s end is a near certainty. But many remain unprepared to replace the benchmark

Richard Sandor's Ameribor benchmark continues to gain traction in the regional/community bank field.

Members of the House Financial Services Committee cited leveraged lending, cybersecurity and the switch to a new interest rate benchmark among potential systemic risks that keep them up at night.

Trustees are concerned about obtaining proper consents from legacy residential mortgage-backed securities investors in a timely fashion in order to make the switch from Libor to another index, Fitch Ratings said.

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.