Sora now the de facto standard for Singapore dollar loan products as banks complete transition
The rate is widely adopted by financial institutions and borrowers and is derived from actual overnight interbank lending transactions in the country
THE move from the Singapore Dollar Swap Offer Rate (Sor) and the Singapore Interbank Offered Rate (Sibor) to the Singapore Overnight Rate Average (Sora) has been completed, said the steering committee for the transition (SC-STS) on Tuesday (Feb 25).
Sora is now the de facto standard for Singapore dollar loan products, following the change.
This comes after banks completed the Sibor to Sora transition on Dec 31, which involved about 87,000 retail loans.
More than half of the Sibor retail loans were actively changed out of Sibor, with the remaining 40,000 loans undergoing automatic conversion in October last year to reference Sora, said the Association of Banks in Singapore (ABS) and SC-STS in a joint statement.
Widely adopted by financial institutions and borrowers, Sora is derived from actual overnight interbank lending transactions in Singapore.
“The shift towards a more transparent and robust benchmark will enhance trust and confidence for everyone using Singapore dollar interest rates, and strengthen the resilience of the Singapore dollar market,” said Leong Sing Chiong, the Monetary Authority of Singapore’s deputy managing director and co-chair of the steering committee.
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ABS and SC-STS noted that the Sora market has since grown to more than S$3 trillion in outstanding derivatives, bonds and loans, comparable to the size of the Sor and Sibor market before the start of the transition exercise.
With the completion of the Sibor to Sora transition, following the completion of the Sor to Sora transition on Jun 30, 2023, the overall transition exercise, which began in 2019, has concluded.
Han Kwee Juan, co-chair of the steering committee, noted that the transition from Sor and Sibor to Sora was “challenging”, due to the number of outstanding legacy contracts.
Despite this, he affirmed that customers are now “more familiar with and have confidence in Sora-based products”.
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