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MAS makes further moves to adopt SORA with floating-rate note sale, leads on Libor replacement in Asia

Bloomberg
Bloomberg8/18/2020 04:40 PM GMT+08  • 2 min read
MAS makes further moves to adopt SORA with floating-rate note sale, leads on Libor replacement in Asia
Singapore is blazing a trail for Libor replacement in Asia, as its central bank becomes the first government entity in the region to auction notes based on a new risk-free rate.
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Singapore is blazing a trail for Libor replacement in Asia, as its central bank becomes the first government entity in the region to auction notes based on a new risk-free rate.

The Monetary Authority of Singapore (MAS) auctioned $500 million of six-month floating-rate notes with a spread over compounded Singapore Overnight Rate Average, or SORA, on Tuesday. It received $2.1 billion of applications. The country is adopting SORA as it moves away from the SGD Swap offer rate, which uses the London interbank offered rate in computation.

Trillions of dollars are at stake, as everything from home mortgages to interest rate swaps are underpinned by two local rates that are due to be discontinued. The shift is part of a broader global push as policymakers around the world develop new benchmarks to replace Libor by the end of 2021, after European and U.S. banks were found to have manipulated it for their own gain.

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