US regionals load up on cheap receive-fix term SOFR swaps

Major dealers are welcoming basis-risk-offset trades with “open arms”, say hedge advisers


Smaller US banks are taking advantage of a pricing imbalance in the dollar-denominated swap market to help protect themselves against the risk of rates falling from their current lofty heights.

Regional and community banks are loading up on receive-fix interest rate swaps linked to the term version of the US secured overnight financing rate (SOFR), hedge advisers say. This allows them to lock in 1–2 basis points higher fixed rates when hedging their floating rate loan portfolios than if they

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