The upcoming transition from the London Interbank Offered Rate (LIBOR) as it ceases to exist is approaching and some division remains throughout the banking industry about selecting a replacement rate. Banking industry regulators have weighed in, selecting the Secured Overnight Financing Rate (SOFR) to replace it. Tune in for the latest details about the impending LIBOR transition.
This episode of The First Business Bank Podcast outlines important details about the LIBOR transition, what First Business Bank clients can expect, and insights from our financial experts you can use in your business. They discuss significant details to keep in mind as this transition unfolds in 2021 and 2022, including:
- Key LIBOR transition dates to remember
- More about replacement rates, such as SOFR, BSBY, and Ameribor
- How replacement rates differ from LIBOR
- First Business Bank’s decision and transition process
- What banking regulators are saying about replacement rates
- Things to keep in mind as you navigate this transition with your bank
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- Replacement indexes are highly correlated
- In stressed economy with rapid rate changes, the credit component of BSBY and LIBOR can cause index spread mean deviation to SOFR
- SOFR is a secured rate without a credit component unlike LIBOR & BSBY which are unsecured and includes credit in rate
