Current Benchmark | New Benchmark | |
United Kingdom | GBP LIBOR | SONIA - Sterling Overnight Index Average |
United States | USD LIBOR | SOFR - Secured Overnight Financing Rate |
Euro Area | EUR LIBOR | ESTER - Euro Short-Term Rate |
Switzerland | CHF LIBOR | SARON - Swiss Average Rate Overnight |
Japan | JPY LIBOR | TONA - Tokyo Overnight Average Rate |
Singapore | SGD SOR | SORA - Singapore Overnight Rate Average |
If payments under a product is calculated by reference to LIBOR or SOR and if such rate is permanently discontinued, the relevant contract needs to be reviewed to assess if the relevant consequences are specified in the terms of the contract. If not, parties will have to agree to apply a new benchmark or a “fallback” replacement rate in place of LIBOR or SOR upon its discontinuation so that the contract can continue to be effective.
We are working to ensure that the transition is of minimal impact to you, financially or otherwise. Depending on the product being affected, the transition approaches may differ according to market developments and industry guidance. We will contact you to assist with the transition in due course.
Depending on how the fallback replacement rate compares to LIBOR or SOR, payments under that contract may be more or may be less than they would otherwise have been.
There is no immediate action required. We will be notifying you in due course of the actions that you may be required to take as part of the transition.
Please also look out for relevant notices from the issuer.
If you have loans referencing SOR, the loans will be affected by this transition.
There is no immediate action required from you unless you wish to reprice or restructure these loans before the industry wide exercise where we will contact you to transition to other loan packages which do not reference SOR.
Once details on the fallback rates and calculation methodology are finalised, ISDA will publish one or more supplements to the 2006 ISDA Definitions (Revised 2006 ISDA Definitions).
New swap and derivatives contracts entered into on or after the effective date of the Revised 2006 ISDA Definitions shall be deemed to have applied the fallback rates by incorporating by reference the Revised 2006 ISDA Definitions into the swap and derivatives contracts.
ISDA has also published a related protocol (ISDA Protocol) that market participants can adhere to amend legacy swap and derivatives transactions entered into prior to the effective date of the Revised 2006 ISDA Definitions.
If you have outstanding swap and/or derivatives contracts referencing LIBOR and/or SOR that mature beyond end 2021, we will reach out to you in due course to discuss the transition to replace or amend such contracts referencing
LIBOR and/or SOR to reference the fallback replacement rates set out in the Revised 2006 ISDA Definitions before end-2021.
The transition from LIBOR/SOR to another benchmark could lead to some changes to your loan repayment, depending on market conditions at that point in time.
We will reach out to you in due course to discuss options that are available to you as a borrower.
Meet the replacement rates and get an understanding of what is being done in the US, UK, Europe and Singapore summary.
Need more information? Visit these websites.
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