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Malayan Banking Berhad- Written Resoution Consent - (LIBOR) - Results

Updated: Mar 17, 2023

Floating Rate Notes issued by Malayan Banking Berhad (the "Issuer") under its USD15,000,000,000 Multicurrency Medium Term Note Programme - XS1960978648


15 MARCH 2023


Full announcement available via SGX


"Results of Written Resolution


The Issuer hereby notifies the Noteholders that the Extraordinary Resolution set out in the Notice of Written Resolution was duly passed on 15 March 2023 by way of Written Resolution and is binding on all Noteholders, whether or not they provided their consent to the Written Resolution. The Issuer will now therefore proceed with the implementation of the Noteholder Proposal by arranging execution of the Amended and Restated Pricing Supplement and the Supplemental Agency Agreement. "

 

Floating Rate Notes issued by Malayan Banking Berhad (the "Issuer") under its USD15,000,000,000 Multicurrency Medium Term Note Programme - XS1960978648


13 MARCH 2023


Full announcement available via SGX.




...


"BACKGROUND


3.1

On 5 March 2021, the Financial Conduct Authority ("FCA") announced the future cessation or loss of representatives of the 35 LIBOR benchmark settings currently published by ICE Benchmark Administration ("IBA"), the administrator of LIBOR, after taking into account the results of the consultation conducted by the IBA that closed on 25 January 2021 (the "FCA Announcement"). Following the FCA Announcement, the FCA will continue to consider the case for using its powers to require continued publication on a synthetic basis of the 1-month, 3-month and 6-month USD LIBOR settings for a further period after end June 2023. However, it is now certain that all USD LIBOR settings will no longer be representative of the underlying market following 30 June 2023. Accordingly, the most commonly used settings of USD LIBOR (namely, overnight, 1-, 3-, 6- and 12- month USD LIBOR) are already restricted from use in new transactions under United States bank supervisory guidance and United Kingdom regulation (with certain limited exceptions).


3.2

In light of the imminent end of the availability of USD LIBOR, the Alternative Reference Rates Committee ("ARRC") has identified the Secured Overnight Financing Rate ("SOFR") as the rate that represents best practice for use in certain new U.S. dollar derivatives and other financial contracts. The Federal Reserve Bank of New York ("Federal Reserve") began to publish the SOFR in April 2018. Regulators have been urging market participants to take active steps to implement the transition to SOFR and other risk-free rates without undue delay.


3.3

With regards to the spread adjustments to reflect the economic difference between the 3-month USD LIBOR and SOFR rates, further to various consultations, the ARRC published spread adjustment recommendations, among which it found that a static spread like the spread adjustment used in ISDA (International Swaps and Derivatives Association)'s documentation historically worked well in cash markets. The ARRC recommended that spread adjustment methodology would be based on a historical median over a five-year lookback period, calculated as the difference between USD LIBOR and SOFR. For cashproducts other than consumer products, the ARRC’s recommended spread adjustment will match the value of ISDA’s spread adjustments to USD LIBOR.


3.4

Following the FCA Announcement on 5 March 2021, Bloomberg, as the vendor for the fallbacks in ISDA documentation, published long-term fallback spread adjustments for derivatives, based on historical five-year median spreads for between USD LIBOR and compounded averages of SOFR, including where 3-month USD LIBOR is replaced by a SOFR based rate, an adjustment spread of 26.161 bps is applied.


3.5

As there are future interest determination date(s) of the Notes that fall after 30 June 2023, the Issuer hereby gives notice to Noteholders for the purpose of enabling the Noteholders to consider and, if they think fit, to approve the Noteholder Proposal (as further described in Paragraph 4 (Noteholder Proposal) of this Notice) by way of a Written Resolution in relation to the Notes and implement a change in the Interest Basis specified in the Pricing Supplement of the Notes from '3-month USD LIBOR' to 'SOFR Compounded Index' and such other ancillary changes as may be necessary to give effect to such Noteholder Proposal in full."

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