HONG KONG, June 16 (Reuters) - OCBC has made a S$150 million ($108 million) loan referencing SORA - the Singapore Overnight Average Rate - the first loan to use the new rate, the bank said on Tuesday, part of a major global effort to change lending benchmarks.
Singapore’s current main lending benchmark, SOR, is calculated using Libor - the London Interbank Offered Rate - which is set to be discontinued at the end of 2021.
Authorities demanded the financial industry move away from Libor after several banks were found to have manipulated the benchmark for profit and fined about $9 billion in total.
Asian financial institutions have been slower than their counterparts in other markets to shift away from existing benchmarks, and the Asian loans market has lagged the derivatives market in this regard, say market participants.
The loan is part of a S$300 million loan to developer Capitaland. The interest rate on the SORA-linked part of the loan will be calculated using a compounded average of daily SORA rates, calculated in arrears.
$1 = 1.3885 Singapore dollars Reporting by Alun John; editing by Richard Pullin