The Canadian Dollar Offered Rate (CDOR) ceased publication on June 28, 2024, after the Canadian Alternative Reference Rate Working Group (CARR), sponsored by the Bank of Canada through the Canadian Fixed-Income Forum, recommended retirement in favour of the Canadian Overnight Repo Rate Average (CORRA). The transition mirrors the global retirement of LIBOR in 2021-2023 and was driven by the same structural concerns: CDOR was a forward-looking term rate derived from a small number of contributor banker's acceptance submissions, while CORRA is a transaction-based overnight rate computed from collateralized repo activity, which is far more robust to manipulation and far more representative of actual money-market funding conditions.
For CRE borrowers and lenders, the mechanical change is significant. CDOR-referenced loans typically priced off a 1-month or 3-month forward-looking CDOR rate plus a spread.
CORRA is an overnight rate, so term CORRA equivalents are constructed either by compounding daily CORRA observations in arrears over the interest period or by referencing Term CORRA, the forward-looking 1-month and 3-month rate administered by CanDeal Benchmark Administration Services Inc. (CBAS) and distributed by TMX Datalinx. Compounded-in-arrears mechanics introduce operational complexity because the interest payable on a given period is not known until the end of that period, which complicates cash-flow forecasting, hedging, and tax accrual.
The transition mechanics for existing loans rest on the fallback language in each loan agreement. Loans originated after the CARR-recommended fallback language was published include a permanent cessation trigger plus an early opt-in trigger, the use of a CORRA reference rate, and a credit spread adjustment (the ISDA-published CSA at the cessation announcement date) added to the new reference rate to compensate for the historical basis differential between CDOR and CORRA.
Loans originated under older legacy language faced amendment or transition to a new rate by mutual consent, and a small portion required a tough legacy solution where CARR-led market-wide remediation worked across affected contracts. Practitioners should now verify that every floating-rate Canadian loan in their portfolio references CORRA (Term CORRA or compounded CORRA), uses a credit spread adjustment that aligns with ISDA's published values, and incorporates contemporary CORRA fallback language for any future benchmark transition.
CDOR (the Canadian Dollar Offered Rate) was a forward-looking term rate: a borrower knew the rate for a 1-month or 3-month period at the start of that period, and it was derived from a small panel of banks' submitted rates on banker's acceptances. That design carried the same weaknesses that ended LIBOR: it embedded bank credit risk, a term premium, and reliance on judgment rather than deep transaction volume, which made it vulnerable to manipulation and unrepresentative of actual funding.
CORRA is the opposite in construction. It is an overnight rate, computed each business day by the Bank of Canada from actual secured (repo) transactions collateralized by Government of Canada bonds, so it reflects a large volume of real trades and is close to risk-free. The trade-off is that an overnight rate is backward-looking for term purposes: to price a loan over a month or quarter you either compound daily CORRA in arrears or use a separately published forward-looking Term CORRA.
Moving a loan from CDOR to CORRA is not a clean swap, because a secured overnight rate sits structurally below an unsecured term rate. To keep the transition value-neutral, a fixed credit spread adjustment (often searched as the CORRA spread adjustment) is added to the CORRA reference rate. That adjustment was set at transition using the historical median difference between CDOR and CORRA over a multi-year lookback, consistent with the methodology used in the LIBOR transition, so it does not move with the market once fixed.
For a CRE borrower, three practical points follow. First, compounded-in-arrears pricing means the exact interest for a period is not known until the period ends, which complicates cash-flow forecasting, hedge matching, and accrual accounting; Term CORRA avoids this where a lender offers it. Second, every existing floating-rate loan's outcome depends on its fallback language, whether it names CORRA, includes a spread adjustment, and defines the switching trigger. Third, borrowers should confirm that new and amended facilities reference CORRA or Term CORRA with an aligned spread adjustment and modern fallback provisions for any future benchmark change.
CORRA, the Canadian Overnight Repo Rate Average, is Canada's risk-free benchmark interest rate. It is an overnight rate calculated by the Bank of Canada from actual secured (repo) transactions collateralized by Government of Canada bonds, and it is the benchmark that replaced CDOR for Canadian floating-rate debt.
CDOR was a forward-looking term rate based on a small panel of banks' banker's acceptance submissions, so it carried bank credit and term risk. CORRA is a transaction-based, secured, overnight rate published by the Bank of Canada. CDOR ceased publication on June 28, 2024, and CORRA is now the benchmark.
It is a fixed amount added to CORRA when a contract moves off CDOR, to offset the fact that CORRA is a secured overnight rate that sits below the unsecured term CDOR. It was set using the historical median difference between the two rates over a multi-year lookback, so once fixed it does not change with the market.
Term CORRA is a forward-looking rate, published in 1-month and 3-month tenors, so the rate for a period is known at its start. Compounded CORRA is built by compounding the daily overnight CORRA across the interest period in arrears, so the rate is only known at the end of the period.
The Bank of Canada calculates and publishes CORRA every Canadian business day and provides historical series on its website. In markets and documentation the rate is often referenced as CAD-CORRA, the Canadian counterpart to benchmarks such as SOFR in the United States and SONIA in the United Kingdom.
Loans that priced off 1-month or 3-month CDOR now reference CORRA, either as compounded CORRA in arrears or Term CORRA, plus a fixed spread adjustment. Compounded-in-arrears pricing means the period's interest is not known until period end, and each loan's transition depends on its fallback language.
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