M&T currently offers Daily Simple SOFR, selected tenors of Term SOFR, and selected tenors of BSBY.
SOFR (Secured Overnight Financing Rate) was selected as a preferred alternative to US Dollar LIBOR by the Alternative Reference Rates Committee (ARRC). Daily Simple SOFR is underpinned by one of the deepest and most active financial markets in the world — the US Treasury repo market, which has more than $1 trillion in daily volume.
CME Term SOFR was endorsed by ARRC for 1-,3-, and 6-month tenors and provides an indication of the forward-looking measurement of overnight SOFR, based on market expectations implied from derivatives markets. In times of market stress, Term SOFR may behave differently than SOFR.
BSBY (Bloomberg Short-Term Bank Yield Index) is a reference rate calculated utilizing a variety of market transaction data that is collectively designed to measure the average short-term, unsecured borrowing costs of large international banks.
M&T’s Tenor Options:
- Daily Simple SOFR: Resets each day and offers rate flexibility – ideal for facilities that have frequent principal draws and repayments. Because the rate resets daily, the amount of interest due at the end of a monthly or quarterly payment period is not known until the end of the payment period.
- CME Term SOFR: M&T supports 1M Term SOFR with monthly or daily rate resets and 3M Term SOFR with quarterly rate resets.
- Monthly/Quarterly Rate Reset: These resetting frequencies offer the convenience of a term rate where the interest rate for the entire payment period is known at the beginning of the payment period.
- Daily Rate Reset: Recommended for use with some types of facilities that have frequent draws and payments. The amount of interest due at the end of a monthly or quarterly payment period is not known until the end of the payment period.
- BSBY: M&T offers BSBY–subject to a borrower suitability assessment– with 1-month (resetting monthly or daily) and 3-month (resetting quarterly) tenors.
Reach out to your Relationship Manager to learn more.