CapitaLand, OCBC ink Singapore's first SORA-based loan

The $150m three-year corporate loan is part of a sustainability-linked loan.

CapitaLand and OCBC have signed the country’’s first loan facility agreement referencing Singapore Overnight Rate Average (SORA), according to a joint announcement.

The $150m three-year corporate loan is a milestone in the transition towards adopting SORA as the new interest rate benchmark for the Singapore dollar cash and derivatives markets. It is part of a $300m sustainability-linked loan extended by the bank to CapitaLand.

The SORA-referenced interest rate has two components, namely, a compounded average of daily SORA rates calculated in arrears and an applicable margin. SORA is a backward-looking overnight rate as compared to forward-looking reference rates commonly used for loan facilities in Singapore, such as the SGD Swap Offer Rate (SOR).

For Singapore’s inaugural SORA-based loan facility, the compounded average SORA will be calculated in arrears, using the “five-business day backward-shifted observation period” methodology.

OCBC had previously executed the country’s first overnight indexed swap derivatives transaction using SORA as the reference rate in November 2019. The bank was also a party to the first Singapore dollar interest rate swap referencing SORA, cleared by LCH in May.