Norway’s Grieg Maritime Group and DNB have entered into loan agreements based on a post-LIBOR rate system.
As part of a pilot of project with DNB, Grieg Maritime adopted SOFR (Secured Overnight Financing Rate) as basis borrowing rate in its refinancing deal for handy bulker Star Japan replacing a loan using the LIBOR system.
LIBOR is being replaced by SOFR on June 30, 2023, with phase-out of its use beginning after 2021.
“We are very happy that Grieg Maritime Group has chosen to spearhead this pilot together with us. This is a new and important financial territory, and we are very excited about launching this first SOFR-loan together with a long-term and trusted client like Grieg Maritime Group,” said Anders Grevstad, executive VP product sales & category in corporate banking and chairman of the alternative reference rate steering committee at DNB.
“The change from USD LIBOR to SOFR for dollar-denominated loans is a major transition and something we will be implemented on a case-by-case basis according to regulatory requirements. We will be following the development closely and with great interest going forward, and we will be offering this to more clients in due time,” Grevstad added.