JPMorgan Sweetens Debut SOFR Loan After Investors Balk
- Credit spread adjustment will ratchet up based on the tenor
- The inaugural offering will likely become blueprint for market
Photographer: Peter Foley/Bloomberg
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Leveraged-loan investors won a major concession in the first-ever U.S. deal to fully use the Secured Overnight Financing Rate, a change boosting their long-run earnings from interest on the transaction, according to a person with knowledge of the matter.
The loan for Walker & Dunlop Inc. is based on SOFR instead of Libor, which has driven the leveraged-loan market for decades. Initially, JPMorgan Chase & Co., the lead bank on the real estate lender’s deal, offered a 10-basis-point credit spread adjustment, a rate-lifting measure meant to compensate for the fact that SOFR is usually below Libor.