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Libor Successor Dealt a Blow in Treasury’s 20-Year Bond Plan

Jan. 17, 2020, 4:42 PM

The U.S. Treasury Department’s decision to issue 20-year bonds is a setback for the Federal Reserve’s preferred candidate to supplant Libor as a benchmark for dollar rates.

Many on Wall Street expected the U.S. to issue floating-rate debt linked to that replacement, called the Secured Overnight Financing Rate, or SOFR. While that’s still possible -- Treasury Secretary Steven Mnuchin said the government continues to weigh its options for new products -- the new 20-year securities may stand in the way.

“I thought SOFR-linked floaters would be another new source of financing in line with the broad official sector push to...

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