Friary deal clears path for Sonia switch revival

Consent solicitation for Libor-linked pass-through notes is first transition test for variable-duration instruments

Principality-Sonia-switch montage

Principality Building Society is seeking noteholder approval to re-hitch a £475 million ($606 million) residential mortgage-backed securities (RMBS) programme to sterling Libor’s overnight successor in the first attempted transition for pass-through securities without fixed duration.

More than £12 billion equivalent of Libor-linked bonds have been flipped to the sterling overnight index average (Sonia) via consent solicitation since June 2019, but activity has been limited to fixed maturity

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