Ben Franklin jig saw

Replacement issues

Category: CLOs Regulation

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SOFR challenges explored

Term SOFR is expected to be the main replacement for US Libor. This premium content article explores the challenges the new benchmark presents to US CLO equity investors.

The US Federal Reserve’s Alternative Reference Rates Committee (ARRC) has firmly backed Term SOFR to replace Libor (SCI 2 August). The new benchmark provides US CLO equity investors with some challenges – challenges that they will need to overcome sooner rather than later, as no new US dollar Libor contracts can be issued after 31 December 2021.

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