By the end of 2021, the London Interbank Offer Rate (LIBOR), one of the global benchmark rates for financial products ranging from loans and bonds to derivatives, will be replaced.
UOB is working with regulators and industry bodies around the world on effecting a smooth transition to the new benchmark rates. As and when replacement benchmark rates are confirmed, we will keep our customers updated so you can make informed decisions and take any action if required.
In 2014, the Financial Stability Board released a report recommending the replacement of the LIBOR. LIBOR is one of the Interbank Offer Rates (IBOR) used globally to set the benchmark rate for a wide range of financial products, from loans and bonds to derivatives and mortgage-backed securities.
Regulators are now working through an IBOR transition process to identify and to develop risk-free reference rates (RFRs). RFRs are overnight interest rate benchmarks based on actual transactions and hence are more transparent and more reflective of market conditions.
The transition from IBOR to RFRs is expected to occur by end-2021. Regulators and market participants, including UOB, are working toward effecting a smooth transition. We encourage you to stay up to date on industry developments in relation to IBOR, including referring to
UOB’s Rates Strategy reports on developments of the IBOR transition.
Singapore’s transition to RFRs
The Singapore Dollar (SGD) Swap Offer Rate (SOR), which is used as a benchmark rate for financial products such as bonds, derivatives, loans, mortgages and structured notes, is affected by this change.
The Singapore Overnight Rate Average (SORA) has been identified by The Association of Banks in Singapore (ABS) and the Singapore Foreign Exchange Market Committee (SFEMC) as the most suitable interest rate benchmark to replace SOR.
SORA has been published by the Monetary Authority of Singapore (MAS) since 2005 and is a robust benchmark that is underpinned by a deep and liquid overnight interbank funding market. You may wish to visit the ABS website for more details on SORA.
To ensure a smooth transition from SOR to SORA, the MAS has set up an industry-led Steering Committee for SOR Transition to SORA (SC-STS). The SC-STS, comprising senior representatives from key banks, relevant industry associations and MAS, provides strategic direction on industry proposals to develop new products and markets based on SORA while supporting this transition process.
If you have outstanding contract(s), for example loan(s) or derivative transaction(s) that reference(s) SOR, we will be contacting you with details of how you may be impacted.
We will provide you with ample notice to consider your options before the transition takes place.
For more information on Singapore’s transition from SOR to SORA, you can refer to the ABS website. You can also contact us through our Customer Service hotline or speak with your relationship manager or client adviser for further assistance.