A loan financing the purchase of a chicken processing company is set to be the first in the $1.2 trillion leveraged-loan market to use the Secured Overnight Financing Rate (SOFR) as a benchmark next year, as lenders prepare to ditch the scandal-plagued LIBOR rate.

Wayne Farms's $750 million loan, which will help fund Cargill Inc. and Continental Grain Co.'s planned acquisition of Sanderson Farms Inc., will initially use LIBOR as a benchmark this year, then automatically switch to SOFR in 2022, according to people familiar with the matter who aren't authorized to speak publicly.

Regulators had originally expected to phase out the London interbank offered rate (LIBOR) by the end of this year, but then extended that deadline for U.S. dollar LIBOR until mid-2023 for transactions that are sold by the end of this year. Starting next year, new loans can't be linked to LIBOR.

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world cas studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.