LIBOR Transition
Commencing July 1, 2023, LIBOR rates for USD contracts shall be replaced by Secured Overnight Financing Rate (SOFR), the reference rates regulated by the US Federal Reserve Board. Bank customers who may have Islamic products or agreements (Financing products, Islamic derivatives for hedging purpose like the Sharia compliant Wa’ad and Profit rate swaps, any sharia complaint Investment products) using the London Interbank Offered Rate (LIBOR) will be affected.
The objective is to inform SIB’s customers for the preparedness for this transition, including:
- Understanding of the changes in the applicability of profit rates and its calculation methodologies;
- Impact of the transition in terms of existing contracts that use LIBOR rates;
- Liaise with the respective relationship managers to agree on terms that may apply
Other Alternative Reference Rates Replacing LIBOR
The following table outlines the alternative rates that will be replacing LIBOR. For detail information about the LIBOR transition, please refer to the respective links and also reach out to our SIB Branch managers or Relationship Managers
Alternative Reference Rates | |||
---|---|---|---|
Currency | Reference Rate Alternative to LIBOR | Published by | Reference |
USD | Secured Overnight Financing Rate (SOFR) CME Term SOFR | Federal Reserve Bank of New York CME Group
| User Guide to SOFR 2021 Press Release Term SOFR
|
GBP | Sterling Overnight Index Average (SONIA) | Bank of England | SONIA Benchmark |
Euro | Euro Short-Term Rate (€STR) | European Central Bank (ECB) | Euro Short Term Rate |