Markit, a provider of independent data, portfolio valuations and over-the-counter (OTC) derivatives trade processing, has begun providing benchmark pricing for investment grade corporate loans arranged by JPMorgan and Citi.
JPMorgan and Citi have used Markit’s CDS data to provide a new market-based pricing (MBP) for revolving credit facilities arranged for corporate borrowers. MBP is a reference spread over LIBOR and represents a departure from the traditional method of pricing such transactions which establishes a set spread over LIBOR at transaction launch that may not reflect market-based spreads if and when the borrower decides to draw down on the facility.
“We are delighted to have worked with JPMorgan and Citi to launch the first of these innovative Market Based Pricing deals, and we are working with other key industry players to establish this pricing method as a market standard,” says Evan Zebooker, director at Markit.