Eastern Bank Limited (EBL) has recently taken a SOFR-based trade loan from Wells Fargo Bank, said a press release Saturday.
This is the first SOFR-based transaction in the Bangladesh market for the lender. Under the deal, Wells Fargo, Singapore has extended a trade loan facility for 180 days to EBL where SOFR has been taken as the USD benchmark rate instead of LIBOR.
As the publication of most tenors of the London Interbank Offered Rate (LIBOR) is expected to cease by the end of 2021, financial market participants across the globe are now gradually moving to risk-free interest rates.
The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralised by Treasury securities.
SOFR is calculated as a volume-weighted median of transaction-level tri-party repo data, GCF Repo transaction data, and data on bilateral Treasury repo transactions, the release adds.
Deputy Managing Director and Head of Treasury, FI and Offshore banking of EBL Mehdi Zaman said, “The transition from LIBOR to risk-free benchmark rates is a recent development in the financial market across the globe and we are happy to partner with Wells Fargo in our first step into the new era of Alternative Reference Rates. This deal will help us prepare for this crucial LIBOR transition and future business endeavours.”
“As the global financial markets transition from LIBOR to Alternative Reference Rates, we are delighted to partner with Eastern Bank on their first SOFR benchmarked loan. Wells Fargo has played a leading role in this important industry initiative and we continue to work with our partners to prepare for the LIBOR transition”, Managing Director and Head CIB –FIG, APAC South, Wells Fargo Bank Santanu Sengupta said.
Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets, proudly serves one in three U.S. households and more than 10% of small businesses in the U.S., and is the leading middle market banking provider in the U.S. Wells Fargo ranked No. 37 on Fortune’s 2021 rankings of America’s largest corporations.
