Sembcorp Inks SORA-Based Loan
The loan from OCBC Bank follows its issuance of the first corporate SORA loan to CapitaLand in June, and the introduction of the first SORA-based retail home loan in July.
Sembcorp Financial Services, a wholly owned subsidiary of energy and urban development company Sembcorp Industries, has inked a three-year S$100 million ($73.68 million) loan from OCBC Bank – the energy sector's first loan pegged to the Singapore Overnight Rate Average (SORA).
The SORA loan is part of a S$300 million loan extended to Sembcorp by OCBC Bank. The loan facility’s interest rate, which references SORA, comprises a compounded average of daily SORA rates calculated in arrears and an applicable margin.
«This transaction not only allows Sembcorp and OCBC to have more clarity on operational processes, but it also helps the wider market gain confidence in the benchmark and signals that such loans are commercially viable. This augers well for a smooth transition from SOR to SORA,» Elaine Lam, OCBC head of global corporate banking, said.
Growing Traction
SORA is a transaction-based interest rate benchmark underpinned by the SGD overnight interbank funding market. An industry consultation group has recommended the discontinuation of the SGD Singapore Interbank Offered Rates (SIBOR) in three to four years, saying that shifting to SORA will result in more transparent loan market pricing for borrowers, and more efficient risk management for lenders.
According to OCBC, the adoption of SORA as an interest rate benchmark for corporate and retail loans has been gaining traction over the past five months. To date, the bank has extended close to S$1 billion in corporate and retail loans referencing Sora, which includes more than S$700 million in Sora-based home loans, the bank said.
