LIBOR Over 1 Percent, First Time In 7 years

The times they are a changin [incrementally]’.

The Wall Street Journal reports,

But on Wednesday it was set at 1.00511%, topping that key threshold for the first time in more than seven years, as investors brace for more Federal Reserve rate increases and respond to overhauls of money market funds. That’s a welcome sign for holders of bank loans, who expect their coupons to increase alongside Libor.

“We’ve been waiting for this for a long time,” said Frank Ossino, a senior managing director who works with bank loans at Newfleet Asset Management. “The asset class will start to act like people expect it to. When Libor goes up, we should get more coupon.”

…Mutual funds and exchange-traded funds that invest in banks loans are once again becoming popular as investors anticipate faster economic growth and inflation under a Donald Trump presidency, which would drive rates higher.

Investors poured $2.8 billion into such funds in November, the biggest month of net inflows since early 2014, according to the most recent data from Morningstar.  – WSJ


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