DBS completes SG’s first USD SOFR-linked export financing transaction

This US$25m transaction, priced off SOFR Averages, is a significant industry milestone as the global Interbank Offered Rate (IBOR) transition gathers pace.

DBS has completed Singapore’s first export financing transaction referencing the USD Secured Overnight Financing Rate (SOFR) with global food and agribusiness, Bunge. 

This US$25m transaction, priced off SOFR Averages, is a significant industry milestone as the global Interbank Offered Rate (IBOR) transition gathers pace.

DBS’ institutional clients will be enabled 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.

According to DBS Group Head of Institutional Banking Tan Su Shan, the bank has been actively engaging its institutional clients to ensure a smooth transition to alternative Risk-Free Benchmark Rates (RFRs) with LIBOR's impending discontinuation. 

This includes partnering corporates plugged into the international trade system to develop suitable trade financing solutions that reference new USD-pegged benchmarks.

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.