Bank of China leads way for Libor successor

Bloomberg

One of China’s biggest lenders is marketing a new dollar note linked to a Libor replacement, as borrowers across the globe move away from the scandal-ridden pricing benchmark.
Bank of China Ltd’s Macau Branch is expected to price a floating-rate note tied to the Secured Overnight Financing Rate (SOFR) on Wednesday, according to a person familiar with the matter. Once priced, this would be the first foreign-currency bond from a Chinese issuer linked to SOFR, according to data compiled by Bloomberg.
The publication of the SOFR (Secured Overnight Financing Rate) began in April 2018 as one of the successors for Libor, which at last count underpinned over $350 trillion of mortgages, loans and derivatives globally. Borrowers in the US and Europe have been active issuers of bonds using this benchmark.
Becky Liu, head of China macro strategy at Standard Chartered Plc, said the latest bond deal from China signals a step forward for banks trying to adapt to a new benchmark, “given the still-low adoption of SOFR in the banking system or financial markets.”