Bonds and loans clash on Sonia compounding style
Choice of ‘lag’ method for sterling RFR loan conventions bars use of BoE index
A new fracture in Sonia cash markets has disappointed some market participants, as recently issued conventions for calculating interest payments on loans have diverged from recommendations for bonds and swaps, threatening a nasty operational headache. The standards have been issued as part of the interest rate market’s transition away from sterling Libor.
Conventions for bilateral and
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