REIT AsiaPac

Sign up for our newsletter

Singapore REITs

OCBC Bank Closes Sustainability-Linked Swap With Far East Hospitality Trust

OCBC Bank Closes Sustainability-Linked Swap With Far East Hospitality Trust

June 11, 2021 – OCBC Bank has executed a sustainability-linked interest rate swap with Far East Hospitality Real Estate Investment Trust (Far East H-REIT), as the Bank moves to increase its offerings of sustainable products to corporate and institutional clients as part of its broader sustainability drive.

The 2.5-year, S$85 million structured derivative transaction aims to provide a hedge against interest rate risk related to Far East H-REIT’s sustainability-linked loan facility, which was secured in March 2021 from OCBC Bank. This hedge effectively allows Far East H-REIT to fix its interest rate for the loan during the duration of the swap.

The number of sustainability-linked products across the derivatives market has been largely limited so far, although there is growing interest in this area. Most sustainability-linked interest rate swaps are step-ups, which imposes heavier interest rates on companies which are unable to meet their sustainability goals. 

In OCBC Bank’s swap, its Global Treasury’s Corporate Sales and Structuring team provided an innovative solution in the form of a step-down. If Far East H-REIT meets its sustainability targets, it would enjoy a lower rate.

Read more here..

Related News

Far East Hospitality Trust Secures First Sustainability-Linked Loan Facility