Credit problem: SOFR faces uphill struggle in loan market

Furnishing Libor’s replacement with a credit-sensitive spread is proving to be a Sisyphean task

Over the next several months, the US Federal Reserve will guarantee up to $600 billion in loans to small and medium-sized businesses as part of its Covid-19 relief effort.

The central bank originally wanted the four-year loans to reference its preferred replacement for US dollar Libor, the secured overnight financing rate (SOFR) – doubling at a stroke the amount of US dollar debt linked to the new benchmark.  

It wasn’t to be. After a volley of complaints from banks, the Fed backed down and

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: