Direct lenders are lavishing risky companies and private-equity firms with capital at rates below what's available in the volatility-lashed high-yield and syndicated-loan market.
"When interest rates are at or close to zero, it's very easy to get credit and the difference between a good company and a bad company is narrow. When the tide runs out, you figure out who is swimming naked."
Circumstances around the latest prominent move away from LIBOR, and the reaction of investors, emphasize that the market is ready to fully embrace SOFR.
Many fret that capital is being routed to businesses that will underinvest in growth for years, even if they recover enough to fully pay the interest on their debt.