SONIA

SONIA (the Sterling Over Night Interest Average) is the representative of the risk-free rate and a successor to GBP LIBOR.

SONIA is the amount of interest paid overnight on obligations with minimal credit risk, liquidity risk and other risks. SONIA is calculated every business day in London based on the transactions entered into between the financial institutions. The rate administrator is the Bank of England. The calculation methodology was approved on April 23, 2018 after several meetings with market participants.

The first issue of FRN bonds based on SONIA was held by the European Investment Bank in June 2018. This is a 5Y issue at GBP 1 bln, the interest rate depends on SONIA+0.35%.

Some issuers amend terms of outstanding LIBOR linked floates and change rates to daily compounded SONIA, for instance after bond holders approved LLOYDS BANK effective on October 7, 2019 changing the terms of its covered bond issue maturing in 2024.