3 months SONIA is an overnight rate measured on each day over the interest period to produce a final compounded interest rate at the end.

Sonia meaning libor. SONIA is the Working Group on Sterling Risk Free Reference Rates preferred benchmark for the transition to sterling risk-free rates from Libor. Unlike SONIA it is not necessarily based on actual transactions. SONIA is backward-looking daily rate unlike LIBOR which is forward-looking and set for different tenors that already align to typical interest periods.

LIBOR is published for seven different lengths of interest period but SONIA is an overnight rate LIBOR is forward looking whereas SONIA is backward looking - the rate of SONIA cannot be determined until the end of the applicable period. See the SONIA interest rate benchmark page. SONIA is robust and sustainable given the volume of transactions underpinning it.

It is used for overnight. The Sterling Overnight Interbank Average rate SONIA is the effective overnight interest rate paid by banks for unsecured transactions in British sterling these are loans that are not backed by collateral. The rate is fixed at the outset of the given interest period.

Term SONIA refers to a forward-looking term reference rate based on overnight SONIA. SONIA Sterling Over Night Index Average is the effective reference for overnight indexed swaps for unsecured transactions in the Sterling market. Compounded SONIA tends to be relatively predictablesee figure 2.

SONIA does not include a term bank credit risk component so is a better measure of the general level of interest rates than LIBOR. LIBOR will disappear at the end of 2021 and most UK lenders are transitioning to a new risk free rate known as SONIA the sterling overnight index average. Changing from using the Libor rate to the Sonia rate appears to be an attempt by the BoE to include fund managers and non-financial companies that issue debt as well as bankers in setting commercial sterling interest rates.

The Sterling Overnight Index Average SONIA is the effective overnight interest rate paid by banks for unsecured transactions in the British Sterling GBP or market. NatWest completes markets first SONIA loan for National Express. GBP LIBOR TO BE REPLACED BY SONIA Sterling Overnight Index Average SONIA has been published since 1997 albeit the methodology for determining it was revised in 2018 and is administered by the Bank of England.