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Private-Credit Firms Use SOFR for Loans Even Though They Don't Have To

  • Antares, Varagon shifted away from underwriting Libor deals
  • Liquidity is a big motivator for direct lenders to adopt SOFR

The rarely spoken secret about the shift away from the U.S. dollar version of Libor is that, since banks are no longer the only firms brokering new deals like leveraged loans, Libor technically can stay alive.

But some of the biggest private-credit players -- who roam outside regulators’ purview on the Libor transition -- are nonetheless falling in line, issuing new deals tied to the leading U.S. replacement, the Secured Overnight Financing Rate.