With the recent publication of market commentary on the floating rate note and syndicated business loan consultations, we get a glimpse into the risks market participants are most concerned with for LIBOR transition. Expect these to grow as the complexities of the securitization and bilateral loan markets now get their turn to participate.
The publication of the ARRC’s cash product consultations marks a significant step in the progress of the transition to alternative reference rates. In responding to the consultations, market participants should consider both the operational feasibility of the amendment approach and the practicality of the hardwired approach, both in the period up to cessation of LIBOR and on the final transition date. The ARRC has requested specific feedback from respondents on the additional needs required to facilitate the acceptance and implementation of the hardwired waterfall methodology, including further development of the term SOFR market.
Market participants taking a proactive role in the consultative process have the opportunity to influence market solutioning industry-wide.
Financial Services Leader, PwC US