It’s Golden Turkey Awards Time, Folks!
Our Turkeys are a little late this year but hey, we’ve been busy worrying about the collapse of the world’s economy. This is the 10th edition of our Turkeys and much thanks to our disorderly, often dysfunctional, regularly inscrutable and absurd government, polity and marketplace for continuing to
Why I’m bothering to write about SOFR transition at this point is a bit of a mystery. Hasn’t this topic now finally exhausted both our energy and interest? Oh, and a European war is being fought as I write which, to say the least, renders the kerfuffle over LIBOR somewhat less than consequential. But irrelevancy has not stopped me before.
Continue Reading SOFR: The Face That Launched a Thousand Ships Was Photoshopped!
Welcome, dear reader, to our annual Golden Turkey Awards. But for my commitment to absolute fairness and concern over the appearance of impropriety, I would have awarded the first Golden Turkey Award to Dechert for actually getting the Golden Turkey Awards done this year. What a crazy year end. The market is insane.
On the other hand, while time is short, there’s plenty to bloviate about. I remember last year we were absolutely ready for the end of the Trump administration because the Biden administration promised a “dull is cool” vibe. Well, dull has been a failure. The farrago of lingering Covid, a return to something which is clearly not normalcy, but something new and with a pond full of black swans flopping around, it is not dull. So, how’s that working out for you? The follies of 2021 at least make writing this column easier. So, we went digging for inanity for the purpose of making gentle fun of things that broadly annoy us and, shockingly, we found things to talk about. So, here we are once again.Continue Reading 2021 Golden Turkeys
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
God knows I’m as sick of LIBOR transition as you are and writing about it twice in quick succession is annoying, but I think necessary.
Here’s the headline which I don’t think has gotten the visibility it deserves:
LIBOR will largely end at the end of this year and not in the misty remove of June 2023. Continue Reading LIBOR’s Winter is Coming
We’ve written before about our anxiety regarding the fact that SOFR does not really seem fit for purpose to support commercial mortgage lending or indeed any cash product. (The nonsense about charging interest in arrears should have been a tell, to be honest.) Of course, the real problem is the absence of a credit-sensitive component to the new index, particularly in this time and place. That strikes me as almost fatal to the ambitions of the ARRC to remake the market in its image. SOFR is an open invitation for value transfer from lenders to borrowers at a time when inflation is closer than the horizon and an inexorable climb in the short end of the yield curve is most certainly on offer.
Continue Reading SOFR Transition: It’s Not Done Yet!
Crunched Credit’s own Rick Jones spoke with the Mortgage Bankers Association about both the threats and opportunities facing the CMBS market as the global pandemic rages on. Covering everything from the Biden Administration, and what it means for regulation in the banking industry, to the “hot mess” that is the LIBOR transition, the
First, the ARRC, playing Charlton Heston, playing Moses, brings down from on high the ten commandments of SOFR and lo, we were sore afraid and with veneration, professed we had no God but SOFR. A solution of sorts to a somewhat self-inflicted problem. As we have observed before, we continue to think the solution to the problem of bankers diddling LIBOR is to punish bankers and shore up the system to make it more robust and not to blow up trillions of dollars of transactions and 40 years of precedent. But that train has left the station.
Continue Reading LIBOR: First They Blinked and Now Some Hope, But a New Problem and It’s Big
My, my, my! Another governmental red line looks to be breached; at least this time no one gets hurt. We, at CrunchedCredit, have in some sense been carrying the government’s water about LIBOR transitions. We have been talking about how to prepare for transition, how to move current loan production onto a sound non-LIBOR basis and how to address legacy assets. In other words, we had taken seriously the warnings of the FCA and the Fed, as well as others upon the regulatory heights who assured us that the LIBOR transition would arrive in early 2022. While we had heard stray musings from the regulatory establishment throughout, we all took on board the assurances from the regulatory doyens and rebroadcast their message, that everyone’s “central assumption” should be that they “cannot rely on LIBOR being published after the end of 2021.”
I gotta tell you, I feel a little bit like Charlie Brown with the government playing Lucy.Continue Reading LIBOR: They Blinked!
Timing is everything. I published a piece two weeks ago on LIBOR transition to SOFR and suggested that folks get on with it and embrace this flawed but seemingly inevitable new SOFR index. Writing that piece, I thought of as rather an exercise in self-care, I just had to get beyond my annoyance with SOFR and stop worrying about SOFR and embrace it with all its flaws and join the SOFR chorus.
Continue Reading Inexorably SOFR…But Hang On!