Singapore leads shift from Libor with $500m note sale

The country's central bank is the first Asian government body to do so.

Singapore is paving the way for London Interbank Offered Rate (Libor) replacement in Asia as its central bank becomes the first government entity in the region to auction notes under a new risk-free rate, reports Bloomberg.

The Monetary Authority of Singapore (MAS) auctioned $500m of six-month floating-rate notes with a spread over compounded Singapore Overnight Rate Average (SORA) on 18 August. It received S$2.1 billion of applications.

The Lion City is adopting SORA as it moves away from the SGD Swap offer rate, which uses the Libor in computation.

The shift is part of a broader global push as policymakers around the world develop new benchmarks to replace Libor by the end of 2021, after European and US banks were found to have manipulated it for their own gain.

Asia has lagged the rest of the world in preparing for the change, but Singapore could offer a template for how the transition can be managed.

Here’s more from Bloomberg.