DBS completes Singapore’s first USD SOFR-linked export financing transaction with global agri-business Bunge
Singapore, 23 Jun 2021 - DBS has completed Singapore’s first export financing transaction referencing the USD Secured Overnight Financing Rate (SOFR)
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with global food and agri-business, Bunge. This USD 25 million transaction, priced off SOFR Averages, is a significant industry milestone as the global Interbank Offered Rate (IBOR) transition gathers pace, and it fortifies Singapore’s status as a global trade hub.
Such transactions enable DBS’ institutional clients to transition their trade financing instruments away from USD LIBOR as a reference rate, ahead of the December 2021 cessation guidance issued by the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.
Tan Su Shan, Group Head of Institutional Banking, DBS, noted that with LIBOR’s impending discontinuation, the bank has been actively engaging its institutional clients to ensure a smooth transition to alternative Risk-Free Benchmark Rates (RFRs). This includes partnering corporates plugged into the international trade system to develop suitable trade financing solutions that reference new USD-pegged benchmarks.
“The global IBOR transition is a hugely complex endeavour, and we are leveraging our deep market expertise to help our clients make sense of these changes. We are pleased to partner forward-looking companies such as Bunge in pioneering trade financing instruments that are a fit for the new interest rate benchmark landscape. In doing so, we are entrenching Singapore’s position as a trusted and reliable trade nexus that is well prepared for the broader changes taking place in the financial markets,” Tan added.
Since 2020, DBS has broken new ground as it helped its institutional clients transition to RFRs, including the Singapore Overnight Rate Average (SORA) for the SGD cash and derivatives market. In September 2020, DBS issued Singapore’s first SORA club loan coupled with a cross currency swap to Olam.
Other industry milestones achieved by the bank include pricing Singapore’s first SORA-referenced floating rate note, launching Singapore’s first business property mortgage loan referencing SORA, and executing Singapore’s first SORA-referenced interbank option trade. SORA-pegged loans now account for one-third of all new SME loans issued by DBS.
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The Secured Overnight Financing Rate, or SOFR, has been identified by the Alternative Reference Rates Committee, a group of private-market participants convened by the Federal Reserve Board and the New York Fed, as the recommended alternative to USD LIBOR.
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About DBS
DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank's "AA-" and "Aa1" credit ratings are among the highest in the world.
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DBS provides a full range of services in consumer, SME and corporate banking. As a bank born and bred in Asia, DBS understands the intricacies of doing business in the region’s most dynamic markets. DBS is committed to building lasting relationships with customers, and positively impacting communities through supporting social enterprises, as it banks the Asian way. It has also established a SGD 50 million foundation to strengthen its corporate social responsibility efforts in Singapore and across Asia.
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