Bahrain is shifting away from LIBOR-based borrowing to SOFR, a move expected to lower financing costs. Yesterday, the Shura Council backed changes to the terms of an $80 million water transmission project. The agreement, linked to the se
TDT | Manama
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Bahrain is shifting away from LIBOR-based borrowing to SOFR, a move expected to lower financing costs.
Yesterday, the Shura Council backed changes to the terms of an $80 million water transmission project.
The agreement, linked to the second phase of upgrades at the Al Dur station, was approved in the presence of Electricity and Water Affairs Minister, His Excellency Yaser Humaidan.
Benchmark LIBOR, or the London Interbank Offered Rate, was long used as a benchmark for setting interest rates on loans, bonds and financial contracts.
However, it was based on banks’ own estimates rather than actual lending figures, which made it vulnerable to manipulation and volatility.
It was phased out in 2024, with SOFR — the Secured Overnight Financing Rate — taking its place. Unlike LIBOR, SOFR is based on real transactions in the US Treasury repo market, making it more transparent and less prone to sudden swings.
Shura Council member Khalid Al Maskati said the agreement had been made between the Ministry of Electricity, the Islamic Development Bank, and the Government of Bahrain.
