We're excited to announce that in our next release, planned for Wednesday, December 15, we will be adding Term SOFR and Ameribor rates to PrecisionLender. Ameribor will be available for use as a pricing index, and Term SOFR will be available as a funding curve and an index.
What's changing, and why are we adding the new rates?
We are adding support for SOFR and Ameribor rates as an alternative to Libor. We will continue to fully support Libor until the index cannot be relied upon or cannot be sourced. We've had many clients request SOFR and Ameribor rates as they transition away from using Libor, and we're excited to be able to offer those rates.
We will offer the following rates:
Ameribor (term rates)
- Ameribor - 30 Day
- Ameribor - 90 Day
Ameribor - Overnight
Ameribor - Average
- Ameribor - 30 Day
- Ameribor - 90 Day
- SOFR 1-Month
- SOFR 3-Month
- SOFR 6-Month
- SOFR 12-Month
What do I need to do to prepare for this change?
If you're currently using a custom index for Term SOFR, please rename your Term SOFR custom index's funding curve family prior to Wednesday to prevent confusion from having two indices visible in an opportunity with the same name. We recommend "Custom Term SOFR" or similar. See "How Do I Rename or Disable a Custom Index" below for details.
If you're not using a custom index for Term SOFR, there's nothing that you need to do before Wednesday, 12/15. On 12/15, you will be able to update your PrecisionLender settings to use Ameribor or Term SOFR.
Once Term SOFR and Ameribor are available, you will need to do the following in order to use those rates:
- Enable Ameribor and/or Term SOFR as an index by editing your Commercial Loan Products to add them as allowable floating and adjustable rates. This will need to be done on a per-product basis.
- Add Term SOFR to new or existing funding packages if you want to use it as a funding curve. If you add a new funding package, you'll need to make sure your regions are updated to allow the new funding package.
- New opportunities will automatically use the most up-to-date pricing assumptions. If you have existing opportunities whose assumptions have been updated to include Ameribor or Term SOFR and you want to use those indices, you will need to fast-forward their pricing dates and choose Ameribor or Term SOFR from the list of available indices, then re-save the opportunity.
- If you have existing opportunities and you don't want to update their assumptions to use the new Ameribor or Term SOFR rates, you can leave your existing opportunities as they are with no changes. They will continue to use the same indices they're using today.
- Once you've updated your settings to allow Term SOFR and Ameribor, if you're currently using a custom funding curve or index for Term SOFR or Ameribor, please disable or rename that custom curve or index, which will avoid confusion from having two funding curves or indices with the same name in PrecisionLender.
How can I update my funding packages and products to use Term SOFR and/or Ameribor on or after 12/15?
Once Term SOFR is released, you can add it as an allowable funding curve to your funding packages. See Setting Up Funding Packages for steps on creating new and editing existing funding packages. If you're creating a new funding package to use Term SOFR, you will need to make sure your regions have your new funding package as an allowable option. See Setting Up and Managing Regions for details on adding or editing allowable funding packages for regions.
Once Term SOFR and Ameribor are released, you can add them as allowable pricing indices for your products. To do that, you'll need to edit your products and add them as Allowable Float Index Families and Allowable Adjustable Index Families. You will also be able to set your default Floating or Adjustable Index to Ameribor - Overnight or Term SOFR. For more information on editing your products, visit Setting Up Commercial Loan Products.
When we release this change on 12/15, we will include it in our release notes to let you know the new rates are available for you to use. In the meantime, if you have any questions, please feel free to reach out to email@example.com.
How do I fast-forward an opportunity?
In an existing opportunity, click the arrow button that appears to the right of the Pricing Date field. This will bring you up to date with the latest assumptions for that opportunity.
Once you fast-forward your opportunity, you will need to choose Term SOFR or Ameribor (if it's been made available for the product you're pricing) from the Index dropdown menu, and then re-save your opportunity.
How do I rename or disable a custom funding curve?
In the Rates and Indices area of the Administration section, select the custom Funding Curve you wish to edit.
If you want to disable a custom funding curve, uncheck the "Enabled" box next to the name of the custom Funding Curve so the box is blank, then save the curve. You will see that it no longer appears in the Client Funding Curve Sources list.
If you want to rename your custom funding curve, edit the name by typing it into the Name field and save the curve.
For more information on editing your custom funding curves, see Creating and Editing Custom Funding Curves.
How do I rename or disable a custom index?
In the Rates and Indices area of the Administration section, select the custom Index you wish to edit.
If you want to disable a custom index, uncheck the "Enabled" box next to the name of the Custom Index so the box is blank, then save the index. Note that you cannot disable a custom index that's part of a funding curve family currently in use.
If you want to rename your custom index, edit the name by typing it into the Name field and save the index.
To rename your custom index's funding curve family, you will need to edit the Funding Curve Family field for each of your custom indices that use that family.
For more information on editing your custom indices, see Creating and Editing Custom Indices.