NetworkingSOFR Academy Publishes White Paper on Across-the-Curve Credit Spread Indexes (AXI & FXI) to Aid LIBOR Transition

SOFR Academy, Inc., a digital education and data provider, announced the publication of additional materials regarding the Across-the-Curve Credit Spread Indexes (AXI). The indexes are robustly defined, forward looking credit-sensitive spreads added to the Secured Overnight Financing Rate (SOFR) to support the transition of loan products away from the US-dollar London Interbank Offered Rate (LIBOR). The additional materials include an AXI Technical White Paper and, with the permission of the Loan Syndications and Trading Association (LSTA), a draft Term SOFR + AXI concept credit agreement.

The AXI Technical White Paper contains details on AXI construction methodology, Term AXI rates, historical performance, underlying transaction volumes, fallback language and more. The White Paper is available for free download here.

The Term SOFR + AXI concept credit agreement document, produced with permission from the LSTA, provides a detailed illustrative example of a credit agreement that references CME Term SOFR + AXI for a syndicated term loan facility denominated in U.S. Dollars. The Term SOFR + AXI concept document is available for free download here.

AXI will be helpful for the business loan market—particularly multi-lender facilities, middle market loans, and trade finance loans—where transitioning from LIBOR to an overnight rate has been difficult. “There are no longer enough transactions with which to calculate LIBOR. That is because banks now fund themselves further out the yield curve,” said Marcus Burnett, Chief Executive of SOFR Academy. “The transition from LIBOR should be done once and it must be done right”, added Burnett.

In a letter to the Alternative Reference Rates Committee (ARRC), SOFR Academy committed to operationalizing AXI in a considered and measured way that incorporates feedback and guidance from a wide range of stakeholders and prioritizes the stability of the global financial market.

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