Weekly Market Update

NEW YORK FED LAUNCHES ALTERNATIVE TO LIBOR

Thursday, April 5, 2018

The New York Federal Reserve launched a new benchmark U.S. rate as a potential replacement for Libor, which will be phased out by 2021. The replacement rate, Secured Overnight Financing Rate (SOFR), is calculated based on the overnight Treasury repurchase agreement market, where $800 billion in volume is traded daily. The Alternative Reference Rate Committee, which selected the new rate, intends for SOFR to serve as an alternative to LIBOR, which has seen a decline in usage due to manipulation and banking reform. Market participants have begun to adopt the new rate and CME Group will start trading SOFR futures in May. However, the new benchmark concerns some skeptics who cite issues around liquidity and the lack of a market for short-term loans.

In Other News

Rating Agency Update

  • Moody's affirmed the University of West Alabama's Baa1 rating. The outlook is negative.
  • Moody's assigned Aa1 to University of Delaware's Series 2018 Taxable Bonds. The outlook is stable.
  • S&P assigned AA+ to the University of Delaware's Series 2018 Bonds. The outlook is stable.
  • Moody's upgraded Medical College of Wisconsin's rating from A1 to Aa3. The outlook is stable.
  • Moody's assigned Aa2 to State University of Iowa's Series 2018 Athletic Facilities Revenue Bonds. The outlook is stable.
  • S&P assigned AA- to the State University of Iowa's Series 2018 Athletic Facilities Revenue Bonds. The outlook is stable.
  • Moody's assigned A1 to the University of Connecticut's Series 2018A General Obligation Bonds. The outlook is stable.
  • S&P assigned AA- to the University of Cincinnati's Series 2018A and 2018B Bonds. The outlook is stable.
  • S&P affirmed Franciscan University of Steubenville's A rating. The outlook is stable.
  • S&P affirmed Washington State University's A+ rating. The outlook is stable.
  • S&P assigned BBB to Carlow University's Series 2018A and 2018B Bonds. The outlook is stable.
  • S&P downgraded the Foundation for Indiana University of Pennsylvania from BBB+ to BBB.
  • S&P assigned A+ to University of Dayton's Series 2018A and 2018B Bonds. The outlook is stable.
  • S&P affirmed North Carolina A&T University Foundation Inc.'s BBB- rating. The outlook is stable.
  • S&P affirmed Pace University's BBB- rating. The outlook is stable.
  • S&P assigned BBB+ to the University of Louisiana at Lafayette's Series 2018 Revenue Bonds. The outlook is stable.
  • S&P assigned AA to The Pennsylvania State University's Series 2018 Bonds. The outlook is stable.
  • S&P affirmed Michigan State University's AA+ rating. The outlook is revised from stable to negative.