SINGAPORE, Sept. 28 (Xinhua) -- The Singapore Branch of the Industrial and Commercial Bank of China (ICBC Singapore) partnered with the DBS Bank (DBS) in providing Singapore's first club loan pegged to the Singapore Overnight Rate Average (SORA) for the global food and agri-business Olam International Limited (Olam), according to a press release from DBS on Monday.

The 200 million Singapore dollars (145.6 million U.S. dollars) one-year committed revolving credit facility is also the industry's first SORA-pegged club loan coupled with a cross-currency swap. This gives Olam the option to enter into a SORA cross-currency swap with DBS at the start of each interest period, giving added certainty on interest rates and swap Singapore dollar proceeds into U.S. dollar.

The 200 million Singapore dollars SORA-based loan and the cross-currency swap marks yet another milestone in the nation's transition roadmap set out by the Steering Committee for SOR Transition to SORA towards adopting SORA as the new interest rate benchmark for the Singapore dollar cash and derivatives markets.

Given SORA's growing importance as a key interest rate benchmark in Singapore dollar financial markets, it supports the Association of Banks in Singapore and the Singapore Foreign Exchange Market Committee's efforts to develop new SORA-based markets, the press release said.

Undertaken by Olam with its wholly owned subsidiary, Olam Treasury Pte. Ltd., the loan facility's interest rate comprises two components, which are a compounded daily SORA rate calculated in arrears and an applicable margin.

Olam's Managing Director and Group Chief Financial Officer Neelamani Muthukumar said the loan provides Olam with the flexibility to remain adaptable and future-ready itself as it embrace the industry's shift toward mainstream adoption of the new benchmark for the cash and derivatives market in Singapore.

Tan Su Shan, group head of Institutional Banking Group at DBS, noted that the loan adds to industry momentum in the shift towards SORA as the new interest rate benchmark in the cash and derivatives markets.

"By adopting SORA-based financing ahead of the market, forward-looking companies such as Olam are positioning themselves well by gaining an early understanding of how SORA works, and how to better tap SORA-based cash and derivatives markets as industry adoption grows and liquidity deepens," Tan added.

Geng Hao, deputy general manager of ICBC Singapore, said being the first Chinese bank to provide SORA-pegged club loan, ICBC Singapore is committed to supporting the vision of the Monetary Authority of Singapore and providing quality banking services to the community. Enditem

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