Amanda Breslin in the Wall Street Journal on corporate borrowing and credit-sensitive alternative rates to LIBOR
- August 16, 2021
- The Wall Street Journal
The Wall Street Journal spoke to Amanda Breslin about the rise of credit-sensitive alternative rates like BSBY and AMERIBOR as companies find that SOFR may not cover all of their needs for longer-term rates.
The Wall Street Journal
It is hard to determine whether one rate is more beneficial than the other as the appropriate credit spreads for each corporate borrower would also be a factor, said Amanda Breslin, managing director of treasury advisory at financial-risk adviser Chatham Financial Corp.
Many large U.S. financial institutions are providing the Secured Overnight Financing Rate, or SOFR, to corporate borrowers as part of the transition away from Libor.
But SOFR may not cover all companies’ needs, banks and corporate advisers say, because the benchmark lacks rates that are weeks or months in the future, making it hard for companies to plan around future interest-rate risk.
Lenders are considering making index rates such as the American Interbank Offered Rate (Ameribor) or the Bloomberg Short Term Bank Yield Index (BSBY) available as alternatives.
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