Amanda Breslin in the Wall Street Journal on corporate borrowing and credit-sensitive alternative rates to LIBOR
Summary
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 JournalIt 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.
Our interest rate risk expertise for corporates
Chatham provides the knowledge and expertise to help you manage the financial risk associated with interest rate volatility. We execute thousands of transactions annually, based on deep and productive banking relationships, giving us market data and insights to help you secure the best pricing and terms. Our goal is to empower you to strengthen your balance sheet and support your company’s financial objectives.
Our highly experienced professionals, backed by the industry’s most advanced analytics and technology, partner with you to develop a complete hedging strategy, advising on such issues as which instruments to use and current market developments to consider. We help you achieve optimal execution, including handling negotiations and auctions. And because we seamlessly integrate with your hedge accounting and treasury management processes, you can be completely confident that every aspect of your strategy is fully covered.
With the highest volume and widest breadth of engagements in the industry, we empower you to negotiate with banks from a position of knowledge, gaining critical insight into market pricing dynamics while maintaining the integrity of your all-important banking relationships.
