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The Age of SOFR has Begun
After the slow summer trickle in volume of commercial loans tied to alternate base rates, Greenwich CLA data shows SOFR deal flow significantly increased in Q4 2021, led by a huge spike in December. Combined with deals tied to the Bloomberg Short-Term Bank Yield Index (BSBY), these alternate base rates made up nearly 60% of all submitted floating-rate transactions originated or renewed in December, excluding smaller Prime-based deals.
As we look ahead into the early months of 2022, we expect this transition to be fully completed from an origination perspective, as both lenders and borrowers get comfortable in a world without Libor.
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