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Pricing SOFR Renewals
At the beginning of Q2 2022, most banks moved away from originating new Libor-based loans and are transitioning into alternative base rates such as SOFR or BSBY. These base rates represent 85% of all traditional Libor-based originations in Q1, with SOFR-based agreements dominating the bilateral market. While a few Libor-based deals were originated during this period, most banks we spoke with expect few going forward, as most lenders who submit data to the Greenwich Commercial Loan Analytics team instituted year-end mandates for retiring Libor.
As we move into a period of market uncertainty driven by international events, inflation and rising interest rates, lenders will be keen to analyze the rate changes between SOFR and Libor.
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