Reference no: EM132679610

Transition from LIBOR to SOFR

Why are you doing this assignment?

The London Interbank Offered Rate (LIBOR), has been used widely to set the rates for many financial transactions, such as business loans, corporate bonds and derivatives. LIBOR is scheduled to be phased out in 2021 and lose its status as the global interest rate benchmark and be replaced in the US with the Secured Overnight Financing Rate (SOFR). As a future business professional you will need to understand the challenges of this transition and their impact in both financial and non financial corporations. That knowledge will allow you to navigate easier these areas and contribute in finding ways to benefit from managing these developments.

What are you going to do?

1. Why is LIBOR been replaced?

2. What are the key differences between SOFR and LIBOR?

3. How are banks and non-financial companies preparing for the transition to SOFR?

4. Which institutions have started using SOFR in their loan extensions?

5. Look for recent articles at financial periodicals that discuss this issue and provide a brief summary of your findings.

- List your resource(s) and include one lesson learned that can be useful in the future.