State Bank of India (SBI), on Tuesday, said it has been awarded the mandate for the first Secured Overnight Financing Rate (SOFR)-linked $100 million External Commercial Borrowing (ECB) deal by Indian Oil Corporation Ltd (IOCL) for five years.
SOFR is an identified replacement for US Dollar London Inter-Bank Offered Rate (LIBOR), which is expected to be phased out at the end of 2021.
The LIBOR sunset has been triggered by the decision of Financial Conduct Authority (FCA) in UK not to compel contributing banks for LIBOR calculation after December 2021.
C Venkat Nageswar, Deputy Managing Director (International Banking Group), SBI, in a statement, noted that this deal is the first SOFR deal in the ECB space, demonstrating that SBI has aligned its systems and processes to embrace Alternate Reference Rates (ARRs).
IOCL, India’s largest public sector Oil Marketing Company, by availing the first SOFR linked ECB, will set the pace for smooth transition by Indian Corporates to ARR mechanism, he added.
Sandeep Kumar Gupta, Director (Finance), IOCL, said: “This is a first step, albeit an important one, in our quest to gear up for the impending transition from LIBOR to Alternate Reference Rates.
“This will also facilitate in efficiently tapping the funding opportunities provided by the ECB market in future.”