Buy side applauds Sonia’s coronation as UK risk-free rate
Decision a ‘no brainer’ but some say rejected secured rates could prove useful
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 –
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