DBS Completes First SOFR-Linked Export Finance Transaction in Singapore, Banking News & Top Stories

SINGAPORE (BUSINESS HOURS) – DBS has finalized Singapore’s first export finance transaction referencing the US Dollar Guaranteed Overnight Finance Rate (SOFR) with agribusiness and agribusiness Bunge, the bank said on Wednesday 23rd June.

The deal, valued at US $ 25 million (S $ 33.6 million), was priced below SOFR averages and represents a milestone as the industry moves away from the Ibor (interbank rate offered).

The bank said this would allow customers to transfer their trade finance instruments from US dollar (USD) Libor (the London Interbank Offered Rate), ahead of December 2021 termination guidelines issued by the Federal Reserve Board, the Office of the Comptroller of the Mint and the Federal Deposit Insurance Corporation.

Tan Su Shan, group head of DBS’s institutional bank, noted that the bank had engaged institutional clients to move them to alternative risk-free benchmarks (RFRs).

To do this, the bank has partnered with companies in the international trading system to develop tailored trade finance solutions that reference new benchmarks indexed to the US dollar.

“Ibor’s global transition is an extremely complex endeavor, and we are leveraging our deep market expertise to help our customers understand these changes. for the new benchmark interest rate landscape, ”Ms. Tan said.

In its efforts to orient institutional clients to RFRs for the Singapore dollar cash and derivatives market, DBS also issued Singapore’s first Singapore Overnight Rate Average (Sora) club loan coupled with a currency swap against Olam in September of last year.

DBS also began pricing Singapore’s first Sora-referenced floating rate note, launching Singapore’s first Sora-referenced commercial real estate mortgage and executing Singapore’s first Sora-referenced interbank options trade.

A third of all new loans to SMEs (small and medium-sized enterprises) issued by DBS are now indexed to Sora, the bank said.

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