Bank of China pioneers SOFR lending in Asia

In absence of term rate, lender uses daily compounded backward-looking rate

Bank of China Tower, Hong Kong
Bank of China Tower in Hong Kong

A subsidiary of Bank of China has provided financing to a corporate client benchmarked to the new US risk-free reference rate, becoming the first financial firm to issue securities linked to SOFR in Hong Kong or China.

The bank made a 90-day US dollar trade finance loan to a corporate client in August and issued two-month US dollar commercial paper to another bank, pegging both transactions to SOFR. Bank of China’s Hong Kong arm did not disclose the identity of the client or counterparty bank

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