LIBOR Discontinuation – Recent Developments (USD SOFR/SGD SORA) And The Way Ahead

The United Kingdom's Finance Conduct Authority ("FCA") announced in 2017 that it will no longer encourage or compel panel banks to submit to the London Interbank Offered Rate ("LIBOR") after 2021. This could lead to no LIBOR publication after end-2021, which would have impact on banking documentations in the Singapore loans market that either directly or indirectly reference the USD LIBOR. To support a smooth transition away from USD LIBOR, the Alternative Reference Rate Committee ("ARRC") has published its recommended fallback language (comprising both a hardwired approach and an amendment approach) for loans that are based on USD LIBOR. Separately, the Monetary Authority of Singapore ("MAS") has recently convened a steering committee to oversee an industry-wide interest rate benchmark transition from Swap Offer Rate ("SOR"), which uses USD LIBOR as an input in its computation, to Singapore Overnight Rate Average ("SORA").