Bank of China has issued the first secured overnight
financing rate (SOFR)-based bonds in Asia. The $350 million
US-dollar SOFR floating rate
note (FRN) issued by Bank of China’s Macau SAR
branch is the first public bond out of China and Asia that is
linked to the US’ Libor replacement.
The transaction involved three tranches of bonds denominated
in CNY, USD and euro with tenors of two to three years
totalling $960 million.
SOFR is a new lending reference rate established by the
Federal Reserve Bank of New York. It sets the benchmark
interest rate of the cost of borrowing cash overnight as
collateralised by US Treasury Securities. SOFR will be the
direct replacement to USD London interbank offered rate
(Libor), which is set to be formally discontinued at the end of
2021. Although market...