Thu, Aug 27, 2020 – 10:53 AM
AGRI-FOOD giant Wilmar International has obtained a S$200 million corporate loan pegged to the Singapore Overnight Rate Average (SORA), from DBS.
At the start of each interest period, Wilmar will also have the option to enter into a SORA interest-rate swap.
This is the Singapore agribusiness industry's first SORA loan, the two companies said in a joint press statement on Thursday.
Its interest rate comprises a compounded daily SORA rate calculated in arrears and an applicable margin.
The new loan and the interest-rate swap are in line with the country's roadmap for the development of new SORA-based markets.
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DBS's group head of institutional banking Tan Su Shan said the latest facility "builds momentum" to facilitate the industry's transition towards adopting SORA as the new interest-rate benchmark for the Singapore dollar (SGD) cash and derivatives markets.
"Forward-looking companies like Wilmar are positioning themselves for the future by tapping SORA financing early.
"This means they will have a greater understanding of how SORA works and will be at the forefront of innovative SORA-based financing solutions as market adoption increases," Ms Tan added.
Wilmar's chief financial officer Charles Loo said the loan will put the agri-food company "in good stead to ride the wave of interest-rate reforms and drive better understanding and greater adoption of risk-free rates in general, which is more stable and robust".
As for the interest-rate swap, DBS group head of treasury and markets Andrew Ng said it shows the bank's commitment to increase liquidity in SORA-derivatives.
This will allow clients like Wilmar to continue to hedge their loan exposures and facilitate a smoother transition into the new benchmark, he noted.
Earlier this year, DBS priced the issue of a SORA-referenced floating rate note.
The new interest rate environment will be more robust, according to Ms Tan, as SORA is underpinned by a deep and liquid overnight interbank funding market.
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) where the interest rate is determined at the start of tRead More – Source