Term SOFR loans unite on spread amid ‘fair’ price debate

First use cases price below fallback spreads, but above market levels; illiquid derivatives may hike hedging costs

A milestone in the long and tortuous transition from Libor to successor rates was reached on October 5, when real estate developer Walker & Dunlop announced a $600 million syndicated loan.

It was the first leveraged loan pegged to a term version of the US’s official replacement rate, SOFR.

The deal led to a further $10 billion of loans linked to term SOFR during October. But the debut transaction wasn’t all smooth running. Investors pushed back against the initial pricing terms of 10 basis

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