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MetLife has issued $1 billion in floating-rate notes tied to SOFR, the LIBOR successor. It is the first company that is not a sovereign, supranational, or agency issuer to issue a SOFR-linked bond of this size.
SOFR, which was developed by the Federal Reserve Bank of New York as a dollar-market alternative to the beleaguered London interbank offered rate, has been gaining traction recently with financial institutions. Fannie Mae, Credit Suisse, Barclays and the World Bank have each sold various types of SOFR-linked debt previously. The new benchmark is calculated based on overnight loans collateralized by U.S. government debt. Libor, on the other hand, is derived from a daily survey of large banks that estimate how much it would cost to borrow from each other without putting up collateral.
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