Reliance Completes Singapore’s First Bloomberg Short-Term Bank Yield Index-Linked Trade Financing with DBS

Published: October 05, 2021

Singapore – DBS has completed Singapore’s first trade finance transaction referencing the Bloomberg Short-Term Bank Yield Index (BSBY) with Reliance Global Energy Services (S) Pte Ltd, the energy trading arm in Singapore of the Indian multinational conglomerate, Reliance Industries Limited.

This benchmark pricing option is in addition to the Secured Overnight Financing Rate (SOFR) based pricing which DBS will continue to support and offer. The option of using BSBY is important and helpful for trade finance, especially for high-volume supply chain transactions requiring straight-through processing. This will help pave a smooth transition for corporates as they will not be able to undertake new USD LIBOR contracts after 31 December 2021.

Sriram Muthukrishnan, Group Head of Product Management, Global Transaction Services, DBS, says, “The transition from USD LIBOR remains a clear priority and is an essential task to strengthen the global banking ecosystem. But one of the thorniest challenges faced by corporates is the uncertainty around the implications of the LIBOR transition to risk-free rates for supply chain and trade financing transactions. Today, a significant amount of trade and supply chain financing originates from platforms and digital ecosystems for which suitable reference rates are required to enable efficient and seamless transaction processing.  At DBS, we have been actively supporting our clients to understand and explore solutions that facilitate a smooth transition to a post-LIBOR world.”

To help corporates navigate the transition, DBS has been actively engaging its institutional clients to explore alternative solutions that best meet their business needs. This includes partnering corporates plugged into the international trade system to adopt alternative non-LIBOR benchmark options, such as the BSBY.

Other industry milestones achieved by the bank to date include DBS completing the first SOFR-based export financing transaction, pricing Singapore’s first SORA-referenced floating rate note, launching Singapore’s first business property mortgage loan referencing SORA, and executing Singapore’s first SORA-referenced interbank option trade. SORA-pegged loans also now account for one-third of all new SME loans issued by DBS.