What Is the Singapore Intꦫerbank Offered Rate (SIBOR)?

The Singapore Interbank Offered Rate (SIBOR) was the benchmark interest rate, stated in Singapore dollars, for lending between banks within the Asian market. The SIBOR is a 澳洲幸运5开奖号码历史查询:reference rate for lenders and borrowers that participate directly or indirectly in the Asian economy. SIBOR was discontinued as of June 30, 2023 and has been replaced by SORA.

Understanding the Singapore Interbank Offered Rat🐼e (SIBOR)

The banking industry uses an 澳洲幸运5开奖号码历史查询:interbank market for transferring funds and currency, and for managing 澳洲幸运5开奖号码历史查询:liquidity. If a regional bank is near the point at which withdrawals are close to depleting short-term cash reserves, that bank used to go into the Singapore interbank market and borrow money at the Singapore Interbank Offered Rate (SIBOR). The terms of the loans varied from overnight to one year. As of June 2023, SIBOR has 🍨been replaced by the Singapore Overnight Rate Average (SORA).

Because of its location, political stability, strict legal and regulatory environment, as well as the volume of business undertaken in Singapore, the city-state is regarded as a major hub of Asian finance. Commonly, very large loans to businesses in the area and 澳洲幸运5开奖号码历史查询:interest rate swaps involving businesses participating in the Asian economy used to be quoted or denominated in SIBOR, plus a number of 澳洲幸运5开奖号码历史查询:basis points.

Benchmarking and Regulation

SIBOR was set daily by the Association of Banks in Singapore (ABS). Thomson Reuters acted as the calculation agent to collate the SIBOR rate from 20 member banks, each day, before 11 a.m. Singapore time. If a minimum of 12 banks failed to report the rates in a given day, there was no SIBOR for that day. If more than 12 report, the top and bottom quartiles wer💎e discarded and an average is calculated.

SIBOR's primary function was to serve as the benchmark reference rate in the Asian markets for debt instruments. This function assists government and 澳洲幸运5开奖号码历史查询:corporate bonds, mortgages, and 澳洲幸运5开奖号码历史查询:derivatives (such as currency and interest rate swaps), among many other financial products. For example, an 澳洲幸运5开奖号码历史查询:interest rate swap involving two counterparties with good credit ratings, both of which have bonds issued in Singapore dollars, will likely be quoted in SIBOR pl♔us a gi𓆉ven percentage.

In another example, a Singapore dollar-denominated 澳洲幸运5开奖号码历史查询:floating-rate note (FRN), or floater, which paid coupons based on SIBOR plus a margin of 35 basis points (0.35%) annually. Every year, the 澳洲幸运5开奖号码历史查询:coupon rate was reset to match the current Singapore dollar one-year SIBOR, plus the predetermined spread. If, for instance, the one-year SIBOR was 4% at the start of the year, the bond would return 4.35% of its 澳洲幸运5开奖号码历史查询:par value at year's end. The spread usually increased or decreased depending on the creditworthiness of the instituti😼on issuಞing the debt.

The Future of the SIBOR

Since the Asian currency crisis in 1997, concerns over 澳洲幸运5开奖号码历史查询:volatility and even liquidity grew to a point where the value of some interest rate benchmarks, especially HIBOR in the Hong Kong Market, is questioned. In Europe, the 澳洲幸运5开奖号码历史🧔查询:Sterling Overnight Interbank Average rate (SONIA) replaced LIBOR as the benchmark. SONIA is based on actual bids and offers from the contributing banks and not indicated levels. The LIBOR can be subject to manipulation if the contribuꦑting banks want to hide or enhance their capital position.

The push for a replacement centered on LIBOR since it was the globally recognized standard. The U.S. 澳洲幸运5开奖号码历史查询:Federal Reserve introduced the 澳洲幸运5开奖号码历史查询:Secured Overnight Financing Rate (SOFR), a new reference rate created in cooperation with the 澳洲幸运5开奖号码历史查询:U.S. Treasury Department’s Office of Financial Research. As of June 2023, SOFR has replaced. With LIBOR being replaced, similar rates, including SIBOR, were also replaced.

The Bottom Line

The Singapore Interbank Offered Rate (SIBOR) was a key benchmark interest rate in Singapore. It represenꦯted the average interest rate at which major banks in the country offer unsecured funds to each other. SIBOR was used as a reference rate for various financial products, including loans and mortgages, influencing borrowing costs and financial markets. It has since been replaced by another rate called SORA.