Get ready for the global IBOR transition

Get ready for the global IBOR transition

Have you met SONIA? Financial institutions are beginning to plan for the transition away from traditional IBORs, a change described as one of the biggest to ever occur to financial markets.

In December last year, Commonwealth Bank of Australia (“CBA”) did something that no other Australian bank had done before. It issued an Australian-origin transaction with a reference rate that was not an interbank offered rate (“IBOR”). The CBA transaction (GBP125 million of one year notes) referenced a margin of 40 basis points over the Sterling Overnight Index Average (“SONIA”), the interest rate benchmark being primed to take over from the London Inter-bank Offered Rate (“LIBOR”).

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This piece has been developed by Barrington Treasury Services.