Global food and agri-business company Olam International (Olam) has secured one of Singapore’s first club loans referencing the US dollar secured overnight financing rate (USD Sofr) with DBS and Industrial and Commercial Bank of China’s Singapore branch (ICBC Singapore).

This enables Olam to transition its financing instruments away from the US dollar London interbank offering rate (USD Libor) as a reference rate, ahead of the December 2021 cessation guidance issued by the US Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. No new USD Libor contracts can be entered into after December 31 2021.

DBS is actively engaging its institutional clients to transition to alternative risk-free benchmark rates well ahead of the impending discontinuation of Libor, says Tan Su Shan, group head of DBS’ institutional banking. “We are leading the way in preparing the business community for the changes currently underway in the global interest rate benchmark landscape.”

In September 2020, DBS and ICBC Singapore signed Singapore’s first club loan pegged to the Singapore overnight rate average (Sora) with Olam. The S$200 million facility was also the first Sora-pegged facility to be coupled with a cross-currency swap.