Libor is going away and there is no final decision on what index will be used to replace it. Due to the manipulation of Libor by a few bankers in London, Libor will cease to be the index as it turned out it was never a real number. It was simple what a small group of London bankers decided it would be, and they made it so they could trade on it and generate illegal profits to their own book. It is proposed to now change it to a actual rate based on real transactions as measured by independent sources.
The US is proposing using the Treasury repo rate to be published by the NY Fed daily. This is known as the Broad Treasury Financing Rate -BTFR, and is based on around $660 billion of trades daily. It is a fluid and real market. It is the cost of overnight loans collateralized by US government debt.
The UK is proposing using the Sterling Overnight Index rate which is similar to the rate proposed by the NY Fed. Japan is proposing the overnight call rate which is considered to be the risk free rate in Japan called Tonar.
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Joel Ross
Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.
