‘Rounding errors’ prompt EBRD to break with Sonia FRN norms

Index-friendly coupon structure touted as a template for future issuance in the UK market

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The market for sterling floating rate notes (FRNs) has been a rare beacon of consistency in the Libor transition. More than £36 billion ($46.3 billion) of debt linked to the Secured Overnight Index Average has been issued since mid-2018, all with an identical coupon structure.

But on February 19, the European Bank for Reconstruction and Development broke the mould with a £750 million three-year FRN that takes a slightly different approach to calculating interest payments.

Like previous Sonia

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