MetLife Inc. is giving a boost to the new dollar fundingbenchmark that's been designed to replace LIBOR, with the U.S.insurer selling a $1 billion bond tied to the secured overnightfinancing rate (SOFR).

A debt-issuing unit of the company sold two-year floating-ratenotes linked to SOFR, according to a person familiar with thematter, who asked not to be identified because they're notauthorized to speak about it. It is the first such transaction ofbenchmark size from a company that isn't either a top-ratedsovereign, supranational, or agency issuer.

SOFR, which was developed by the Federal Reserve Bank of NewYork as a dollar-market alternative to the beleaguered Londoninterbank offered rate (LIBOR), has been gaining traction recentlywith financial institutions. Fannie Mae, Credit Suisse, Barclays, and the World Bank have each soldvarious types of SOFR-linked debt previously.

The new benchmark is calculated based on overnight loanscollateralized by U.S. government debt. LIBOR, on the other hand,is derived from a daily survey of large banks that estimate howmuch it would cost to borrow from one another without putting upcollateral.

The MetLife transaction, which was managed by Bank of America,is a floating-rate note with a coupon of 57 basis points more thanSOFR, according to a person familiar. The notes are being issued byMetropolitan Life Global Funding I.

SOFR was set at 1.93 percent for Wednesday, down 2 basis pointsfrom the previous day. Overnight dollar LIBOR for the same day was1.91538 percent.

See also:

• LIBOR Challenger Embraced in Debut Commercial PaperTransaction

From: Bloomberg

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