(Bloomberg) -- In another step forward for a new benchmark lending rate, KKR & Co. switched to the regulator-approved Secured Overnight Financing Rate from Libor in the middle of marketing a buyout financing on behalf of Trilantic North America.

When KKR as lead arranger began marketing the $545 million leveraged buyout of Addison Group in the first week of January, it proposed pricing the loan off Libor. Less than two weeks into the sales process, KKR shifted to SOFR from the discredited London interbank offered rate.

The Addison loan was well received by investors, allowing KKR to also lower the over-all yield paid to investors, according to people familiar with the matter who aren’t authorized to speak publicly. The deal remains over-subscribed, the people said. A KKR representative declined to comment.

The latest shift to SOFR underscores the rate’s growing acceptance in the $1.3 trillion leveraged loan market after an initially slow transition process. While Libor was scheduled to be discontinued for new loans starting in 2022, bank regulators made an exception for those under contract last year. KKR, one of a handful of non-banks with a sizable underwriting business, isn’t under bank regulatory supervision.

Almost all LBO-backed leveraged loans and those for mergers and acquisitions are being marketed with SOFR. For example, Bausch Health Companies’ $2.5 billion loan launched with SOFR as did medical technology company Becton, Dickinson & Co.’s $1.15 billion term loan for the spinoff of Embecta Corp. 

Using the replacement benchmark makes sense for borrowers. SOFR is currently lower than Libor, even taking into account credit spread adjustments on many loans to make up for the differences between the two rates.

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