The syndicated loan market would really like an IOSCO-compliant Forward Looking Term SOFR to develop. If such a rate developed, it would solve several problems inherent in SOFR.
Today the LSTA published the Exposure Draft of the LSTA’s Form of Investment Grade Revolving Credit Facilities Term Sheet. The LSTA plans to publish this in final form at year end.
November was a solid month in the secondary loan market, with S&P/LSTA Leveraged Loan Index (LLI) returning 0.59%. October, however, was a different story. Secondary loan trading volume spiked 19% in October to a six-month high of $64 billion. This followed a two-month stretch where volumes fell below $60 billion per month.
As 2019 comes to a close, the rise of environmental, social and governance (ESG) significance in financial markets has been undeniable. In Europe, this trend is quite established, but over the last two years it has jumped the pond and there is now significant ESG interest by U.S. investors.
Readers may be forgiven for having thought that the deadline to switch away from LIBOR was December 31, 2021. In fact, for some jurisdictions, it is more than a year earlier.
This week, the LSTA returned to Tel Aviv once again to discuss the US institutional syndicated corporate loan market before 450 attendees.
On Thursday, some 600 members attended the LSTA’s “The End of LIBOR: The Big Picture” webcast, a reference presentation intended help folks quickly come up to speed on i) Why LIBOR is ending, ii) what is the anticipated replacement rate (SOFR), what are its variants and how do they behave, iii) status and key steps for replacing LIBOR loans with SOFR loans and iv) key resources. Our next LIBOR webcast – “Demystifying the LSTA’s SOFR Concept Credit Agreement” – will take place on December 3rd.
While some headlines might suggest otherwise, we know that markets ebb and flow. After all, that’s what makes them markets. Today we are doing a short pre-holiday check in on how that ebbing-and-flowing loan market is doing.
ESG and sustainability are two buzzwords that crop up more and more in the financial markets – the loan market included. According to Bloomberg, $97 billion in green loans and sustainability linked loans have come to the global loan market in the first three quarters of 2019. Of that activity, more than $55 billion in volume represents sustainability linked loans.
According to CME, there have been over $300 billion of SOFR floating rate issuances through October 2019. While material, that’s kind of old news. The new news? That SOFR bilateral loans are beginning to appear publicly.
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Membership in the LSTA offers numerous benefits and opportunities. Chief among them is the opportunity to participate in the decision making process that ultimately establishes loan market standards, develops market practices, and influences the market’s direction.