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Tag Archives: derivatives

COMMERCIAL FINANCE 701 — Swapping a floating rate for a fixed rate

In the commercial loan world, pricing is frequently tied to a floating (variable) rate index, which places the risk of a rising interest rate squarely on the borrower.  Depending on the term and size of the loan, the underlying financial strength of a borrower, risk aversion, and soothsaying predictions about the direction of interest rates, a borrower might want to ...

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COMMERCIAL FINANCE 701 — A LIBOR Update: Here comes SOFR!

  Following the sounding of LIBOR’s death knell last summer, a flurry of governmental and industry activity culminated in the selection of SOFR as a replacement index rate for commercial loans.  Accordingly, a sequel of our August 2017 column “The Passing of LIBOR” is in order. London Interbank Offered Rate (LIBOR) Recall on July 27, 2017, the Brits prospectively announced ...

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COMMERCIAL FINANCE 701: The Passing of LIBOR

The death knell for LIBOR officially sounded on July 27, 2017, when the UK’s Financial Conduct Authority broadcast it would cease maintenance of the internationally-used interest rate benchmark beyond December 31, 2021.  The surprise announcement was surprising only as to the timing of the press release and the sunset date.  The Wall Street Journal dissed the rate back in 2008 ...

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