Capital Tower. Photo: CapitaLand.
CapitaLand and United Overseas Bank Limited (UOB) have entered into a two-year dual-tranche loan agreement worth $200 million.
In a release, CapitaLand revealed that the dual-tranche loan references both the Secured Overnight Financing Rate (SOFR) and the Singapore Overnight Rate Average (SORA), making it the first of its kind within Singapore.
It noted that the interest rate on the two tranches will be based on SORA and SOFR’s daily compounded averages, both calculated in arrears. It added that the proceeds of the loans will be used for general corporate purposes.
The bilateral loan facility comes ahead of a global transition from interbank offer rates to alternative risk-free rates, which are more transparent and reflective of market conditions.
The relevant regulatory and industry bodies have identified SORA and SOFR as “the alternative benchmark rates to replace the Swap Offer Rate (SOR) in Singapore and the US Dollar LIBOR respectively”.
“With our first SORA-SOFR dual tranche structure, CapitaLand continues to proactively prepare for the global transition to alternative benchmark rates,” said Andrew Lim, Group Chief Financial Officer of CapitaLand Group.
“As a globally diversified real estate company, CapitaLand’s early adoption of these new interest rate benchmarks across different currencies enables us to work with our key banking partners such as UOB, to ensure that the Group’s ongoing transition of our loan book to alternative benchmark rates proceeds smoothly.”
The collaboration between CapitaLand and UOB is in line with the initiatives of the Monetary Authority of Singapore to support SORA’s adoption as a key interest rate benchmark within the city-state and the development of robust and vibrant SORA markets.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email firstname.lastname@example.org