
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 syndicated loans, published this month by the sterling risk-free rate (RFR) working group, endorse a so
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