3-Month CME Term SOFR

Current 3-month CME Term SOFR

3-Month CME Term SOFR is the benchmark rate used for loan applications received on or after 4 January 2022. From 8 April 2023, 3-Month CME Term SOFR will be the benchmark used for loans denominated in United States Dollars and finalised after 30 July 2017 and prior to 4 January 2022. If you have multiple loans originated by Prodigy Finance, your loans may track different benchmarks, depending on when they were finalised and the currency of the loan.
We adjust the variable interest rate quarterly on 8 January, 8 April, 8 July and 8 October tracking the 3-Month CME Term SOFR rate available at the end of the previous business day. If the 3-Month rate CME Term SOFR is less than zero percent, then the benchmark will be zero percent for purposes of calculating the interest rate.

Transition from 3-Month Term USD Libor to 3-Month CME Term SOFR
On 8 April 2023, the benchmark rate of all USD loans originated by Prodigy Finance during the period from 30 July 2017 to 31 December 2021 changed from 3-Month Term USD Libor to 3-Month CME Term SOFR.

Why have we changed the Base Rate?
In 2017, the Bank of England and the Financial Conduct Authority (“FCA”) expressed concern that LIBOR was becoming less representative of the underlying market, and consequently announced that LIBOR was to cease at the end of 2021. To avoid disruption to existing agreements where the applicable base rate was linked to LIBOR, the FCA provided for 3-Month Term USD Libor to be published for an extended period ending on 30 June 2023. As this period ends on 30 June 2023, we changed the Base Rate on our loans which we linked to 3-Month Term USD Libor, to a replacement reference rate. The replacement rate we have selected is 3-Month CME Term SOFR. SOFR is based on the rates that financial institutions pay one another for overnight loans or repos and is published daily by the Federal Reserve Bank of New York. In 2017, the Federal Reserve formed a group of large financial institutions known as the Alternative Reference Rate Committee (ARRC) to work on finding an alternative to LIBOR. They ultimately chose SOFR and this choice was endorsed by the FCA.

Why is a credit adjustment value added to my Rate of Interest?
SOFR is calculated in a different way to sterling LIBOR. Following industry consultations, it was decided that in order to make SOFR a fair replacement for both lenders and borrowers, a small adjustment needs to be made to the interest rate to account for the difference in the way sterling LIBOR and SOFR are calculated. This is referred to as a ‘credit adjustment spread’. There is an industry standard methodology for calculating the credit adjustment spread, which is to take the median difference between the sterling LIBOR and SOFR rates over a five-year period. The median is the middle number of all the daily differences sorted from high to low.

How is the credit adjustment value calculated?
On 5 March 2021, the FCA announced the dates for the cessation of sterling LIBOR. As a result of this, the credit adjustment spread was calculated between the sterling LIBOR and SOFR rates by an industry body, the International Swaps and Derivatives Association (ISDA), using the industry standard methodology, based on the period from 6 March 2016 to 5 March 2021. The credit adjustment spread applicable to your contract is recorded in your monthly statements after 8 April 2023.

What is the impact on the Rate of Interest under your Agreement?
Prodigy Finance will apply the credit adjustment spread value to your new Base Rate (3-month CME Term SOFR) and the fixed margin, which is applicable to your Agreement. This will form the Rate of Interest applicable to your Agreement.

How your previous LIBOR linked rate was calculated
3-Month Term GBP LIBOR + fixed margin applicable as stated in your loans agreement

How your new base rate product rate is calculated
3-month CME Term SOFR + credit spread adjustment + fixed margin applicable as stated in your loan agreement

*CME GROUP MARKET DATA IS USED UNDER LICENSE AS A SOURCE OF INFORMATION FOR CERTAIN PRODIGY FINANCE LTD (“PRODIGY”) PRODUCTS. CME GROUP HAS NO OTHER CONNECTION TO PRODIGY PRODUCTS AND SERVICES AND DOES NOT SPONSOR, ENDORSE, RECOMMEND OR PROMOTE ANY PRODIGY PRODUCTS OR SERVICES. CME GROUP HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE PRODIGY PRODUCTS AND SERVICES. CME GROUP DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF ANY MARKET DATA LICENSED TO PRODIGY AND SHALL NOT HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN CME GROUP AND PRODIGY.

Visit CME’s website to find out more on 3-Month Term SOFR.

Terms of Use: The SOFR rates on this page is made available solely to Prodigy Borrowers as a reference for the benchmark rates used in the interest rate of their loans. When viewing these rates, no Prodigy customer nor any visitor to the Prodigy Finance website may sell, license, rent, modify, print, collect, copy, reproduce, download, upload, transmit, disclose, distribute, disseminate, publicly display, publicly perform, publish, edit, adapt, electronically extract or scrub, compile or create derivative works from any content or materials (including, without limitation, through framing or systematic retrieval to create collections, compilations, databases or directories) or otherwise transfer any of the content on this page to any third person.