Buy side applauds Sonia’s coronation as UK risk-free rate

Decision a ‘no brainer’ but some say rejected secured rates could prove useful

Sterling-market
BoE working group has opted for a reformed version of Sonia as the official risk-free rate for sterling

Market participants agree that the unsecured sterling overnight index average rate (Sonia) is the correct choice for a new alternative risk-free rate in the UK. But they say other, secured benchmarks that were under consideration could still be useful despite being rejected by a working group tasked with deciding on a substitute for Libor.

The Working Group on Risk-Free Reference Rates – sponsored by the Bank of England and consisting mainly of sell-side banks – announced on April 28 that a

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