It’s a rule around here that I don’t write on the same topic twice in a row because if you don’t get bored, I will. I am making an exception this week to revisit last week’s blog about the industry’s failure to take on, or at least discuss, the considerable negative externalities of transferring our entire business from LIBOR to SOFR while we have time. The problem, of course, and I recommend last week’s commentary for a more fulsome discussion (or screed), is that we are barreling toward a world in which trillions of dollars of floating rate debt will be based on an index that is not credit-sensitive and which may (and likely will) cause a transfer of value from the providers of capital to the users of capital.
Continue Reading It’s Time for The Industry to Engage on SOFR’s Voldemort Problem
July 2021
The Powers That Be Are Rallying Around SOFR and That’s a Mistake
By Rick Jones on
To my gentler readers, first an apology for this interregnum in publication. I’ve been sitting on this commentary like a hen on an egg for weeks. All I can say is having to work for a living gets in the way of writing about interesting stuff.
It’s now July and supposedly the transition from LIBOR to SOFR is almost already a done deal. Anyone notice that happening? Not to bury the lead but it hasn’t happened. Note that even the ARRC, between harrumphs about the slow take-up of SOFR products, has said that MAYBE they’ll let folks use Term SOFR soon (although they are still being a bit cagey on when and, perhaps more importantly, who will be given that privilege). That’s not good if we’re gonna base an entire floating rate marketplace on SOFR.Continue Reading The Powers That Be Are Rallying Around SOFR and That’s a Mistake