Standard Chartered has completed its first trade loan transaction in Hong Kong referencing the USD secured overnight financing rate (Sofr) for Qatar National Bank (QNB), the largest financial institution in the Middle East and African region.

As financial markets move away from London interbank offered rate and stop entering into new Libor contracts starting from 2022, Standard Chartered used the three-month Sofr as the reference rate for the transaction. It provides a good foundation for the bank to help its clients navigate through the interest rate transition and adopt the new pricing benchmark early. The bank says the cross-border collaboration demonstrates its unique global network and the role of Hong Kong as an international financial centre.

Samuel Mathew, global head of flow and financial institution trade, transaction banking, at Standard Chartered, says: “The successful conclusion of this transaction showcases the bank’s leading position in helping our clients transition to the new interest rate benchmarks. We expect more such deals to be priced with alternatives such as Sofr as the industry moves towards risk-free rates and cessation of Libor.”

Khalil Geagea, QNB’s group head of financial institutions, believes the interest rate reform has a major impact on the financial market and the way it conducts business. “This trade loan will enable us to facilitate trade flows and meet our clients’ needs for trade finance in our key markets,” he adds.