SOFR

Clayton described the Secured Overnight Financing Rate known as SOFR, as “a good risk free benchmark.”

The sections pertaining to public finance can be implemented immediately.

The proposed transition regulation addresses the possibility that such a modification of a debt instrument, derivative, or other financial contract could be a taxable transaction for federal income tax purposes or could result in other tax consequences.

Issuance using the new Secured Overnight Financing Rate has risen to $265 billion since the beginning of 2019.

Internal Revenue Service enforcement officials told NABL workshop attendees the service is hiring five new revenue agents, up from the current 20, and two additional tax law specialists.

The Connecticut Housing Finance Authority became the first housing entity to use the Secured Overnight Financing Rate when it issued $100 million of variable-rate bonds.

The Alternative Reference Rates Committee said the recommendations are part of its mandate to address risks in contracts that refer to Libor as part of the larger shift to the Secured Overnight Financing Rate (SOFR).

Fallback language is expected to be released before year-end by the Alternative Reference Rates Committee convened by the Federal Reserve and ISDA.

The muni market has been slow to embrace SOFR but the existing Libor benchmark is set to cease publication in 2022.

Libor based municipal debt stood at $47.6 billion at the end of 2018, or about 1.3% of the overall muni market.

After a difficult 2018 draws to a close with the U.S. government in shutdown and municipals reeling from a tax law that lowered the value of the tax exemption and took away a key refinancing tool, here’s a list of changes we’d like to see in the coming year.

It is critical that financial players start to pay very close attention and start reviewing their documents.

The Libor changeover isn't officially due for three years, but the change could have big ramifications for munis and is already underway.

The two regulatory agencies are working to ensure a seemless transition to another benchmark when Libor is phased out in 2021.

The authority, one of the largest municipal bond issuers, will use the new benchmark to reduce its exposure to Libor, which is slated to sunset.