MetLife Breaks Ground With $1 Billion Bond Based on Libor Heir

(Bloomberg) -- MetLife Inc. is giving a boost to the new dollar funding benchmark that’s been designed to replace Libor, with the U.S. insurer selling a $1 billion bond tied to the secured overnight financing rate.

A debt-issuing unit of the company sold two-year floating-rate notes linked to SOFR, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. It is the first such transaction of benchmark size from a company that isn’t either a top-rated sovereign, supranational or agency issuer.

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.

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

SOFR was set at 1.93 percent for Wednesday, down 2 basis points from the previous day. Overnight dollar Libor for the same day was 1.91538 percent.

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