Pricing Loans With Libor Heir Looks Simpler Than Market Feared
- Floors for rates on loans make differences in benchmarks moot
- That may change whenever short-term rates rise again
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Figuring out how much a leveraged loan should cost after the market’s benchmark changes looks like it will be much simpler than corporate finance pros had feared, at least for now.
Real estate lending company Walker & Dunlop Inc. on Tuesday became the first company to announce a U.S. leveraged loan tied to the Secured Overnight Financing Rate. Regulators are pushing SOFR as a replacement for the scandal-plagued London interbank offered rate, and Libor can’t be used as a benchmark for new loans starting in 2022.