HSBC has completed its first corporate loan referencing US dollar secured overnight financing rate (SOFR) in Hong Kong. As the market prepares for the upcoming transition from interbank offered rates (IBOR) to alternative risk-free rates (RFR), a local mid-cap company secured the USD SOFR loan from the bank, which provided it with flexible repayment and re-borrowing capability for general business purposes.

Following a pilot USD SOFR trade loan completed last month, the corporate loan marks yet another step forward in the gradual adoption of new interest rate benchmarks in the territory, the bank notes.

Terence Chiu, the bank’s head of commercial banking in Hong Kong, says the transaction "demonstrates our product innovation capability to support corporates in using alternative RFRs in transactions and financing tools”.

HSBC has been supporting the IBOR reforms in the financial hub. On top of lending solutions, the bank executed Hong Kong’s first Hong Kong dollar overnight index average (HONIA) and HIBOR interest rate swap in October 2019, the first centrally cleared HONIA IRS contract in July 2020, and first HKD and offshore renminbi cross-currency swaps referencing HONIA and SOFR in October 2020.