There are currently over $80 billion in SOFR securities in the market
Fannie Mae has priced the issuance of its fourth Secured Overnight Financing Rate (SOFR) securities at $2.5 billion of 18-month, floating-rate corporate debt.
Initially known as broad Treasuries financing rate, the SOFR is a broad measure of the cost of borrowing cash overnight in the US Treasury repo markets, according to the Federal Reserve Bank of New York.
Fannie Mae wrote in a statement that there are more than $80 billion in SOFR-linked securities in the marketplace at present.
"Today's transaction is an opportunity to maintain a SOFR curve out to 18 months," said Nadine Bates, senior vice president and treasurer of Fannie Mae. "We recently hit the one-year anniversary of the first publication of SOFR and, in a short amount of time, have seen significant growth in this market. It is important to continue the momentum toward developing alternatives to the London Interbank Offered Rate (LIBOR). The only way to build further liquidity in the SOFR market is if market participants remain actively engaged."
Fannie Mae issued its third offering earlier this year, marking its seventh SOFR security. Bates said the offering “increases the liquidity of the SOFR curve.”
“The more maturity points there are, the better equipped the market will be to adopt the new rate," said Bates. "It is important to maintain momentum in the SOFR market, and Fannie Mae is proud to demonstrate commitment to the Alternative Reference Rate Committee's (ARRC) efforts to develop LIBOR-alternatives."
