UOB and Capitaland First Dual Tranche SORA-SOFR Mortgage Collaboration

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In a launch, CapitaLand revealed the dual-tranche loan references both the Secured Overnight Financing Rate (SOFR) and the Singapore Overnight Rate Average (SORA), which makes it the first of its type within Singapore.

It noted the rate of interest on the 2 tranches will be predicated on SORA and SOFR’s daily compounded averages, both computed in arrears. It added that the proceeds of the loans will be utilized for general corporate purposes.

The bilateral loan centre comes before a worldwide transition out of interbank offer speeds to alternate secure prices, that are somewhat more transparent and reflective of market conditions.

The applicable regulatory and business bodies have identified SORA and SOFR as”the alternate benchmark rates to substitute the Swap Offer Rate (SOR) at Singapore and the US Dollar LIBOR respectively”.

“With our initial SORA-SOFR double tranche construction, CapitaLand proceeds to prepare for the worldwide transition into alternative benchmark prices,” explained Andrew Lim, Group Chief Financial Officer of CapitaLand Group.

“As a worldwide diversified property business, CapitaLand’s early adoption of the new rate of interest benchmarks across different monies empowers us to work together with our crucial banking partners like UOB, to make certain that the Group’s continuing transition of our loan book to alternate benchmark rates proceeds easily.”

The alliance involving CapitaLand and UOB is in accord with the initiatives of the Monetary Authority of Singapore to encourage SORA’s adoption as a vital rate of interest benchmark over the city-state and also the evolution of strong and lively SORA markets.