SIBOR Transition to SORA

With the discontinuation of the SIBOR after 31 December 2024, it is imperative to take action to ensure a seamless transition for your SIBOR-based property loan. To prevent any disruptions to your loan, we encourage you to contact us early to explore these options:

• Switch to prevailing property loan package offered by our bank
• Switch to the SORA Conversion Package (SCP) at the spot-spread

If you do not switch out your SIBOR-based property loan to an alternative loan package by 30 April 2024, it will be automatically switched to the SCP at the 5-year historical median spread in June 2024.

The SCP seeks to directly convert your existing SIBOR-based loan to a SORA-based loan. The key components of the SCP are:

• Your existing SIBOR loan margin which will remain unchanged;
• 3-month Compounded SORA, a floating interest rate benchmark published by the MAS; and
• Adjustment Spread, to be added to account for the difference between the SIBOR and the 3-month compounded SORA.

An adjustment spread is necessary when converting a SIBOR loan to a 3-month Compounded SORA one because of inherent differences between the SIBOR and the compounded SORA. The adjustment spread accounts for differences in the level of the SIBOR and the 3-month Compounded SORA, to maintain parity when switching from SIBOR to 3-month Compounded SORA.

It is important to note that the computation of the adjustment spread varies depending on the timing of your transition.

Spot-spread under the Active Transition Phase (1 September 2023 to 30 April 2024) is calculated as the average difference between the applicable SIBOR and 3-month Compounded SORA in the preceding three-month period, floored at zero.

The Adjustment Spread (spot-spread) is published by The Association of Banks of Singapore’s (ABS) website on the first business day of each month.

5-Year Historical Median Spread under the Automatic Conversion Phase (June 2024) is computed as the historical median between the applicable SIBOR and the 3-month Compounded SORA over the period 30 June 2018 to 30 June 2023.

The 5-year historical median spread that will be applied during automatic conversion for the 3-month SIBOR to the 3-month Compounded SORA has been set and fixed upfront at 0.3571%; this will help to compare amongst the available options and to make an informed decision.