Why do fixed rate lenders use treasury but floating rate use SOFR?
At a HY field that originates bridge loans and we lend over SOFR. This makes sense given that our back leverage provider lends to us over SOFR. Why, on the other hand, do many fixed rate lenders (such as insurance companies) lend over the treasury?
Treasuries is a US bond pricing which whereas sofr is a lending rate between institutions. Credit would use SOFR since its more dynamic, & changes with immediate market conditions for lending specifically and treasuries would have much different duration and be linked to the credit of the us govt. They are just two different things... that being said, they can correlate (ex: mortgages and the 10 yr) and there are different floating benchmarks that can be used, too (swaps, prime). They just represent two different markets
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