TRANSITION FROM LIBOR TO SONIA
“We commissioned 2TIX LTD to run a small-group training session on the transition from LIBOR to SONIA via Microsoft Teams. The training covered all the necessary details including the background to the change, the key actions we will need to take, and how to calculate interest on a Compounded SONIA loan.The presentation was thoroughly researched and from his extensive knowledge Adrian was able to answer all our questions. It was a very worthwhile session and we would certainly recommend him.”
"2tix Ltd provided great support and guidance on the drafting and calculation methodology of a new SONIA RCF."
SONIA transition is coming and implementation now needs to be prioritised. Even if you only have one LIBOR loan you will be affected by this change.
SONIA will replace LIBOR as the main reference rate for loans by the end of 2021. SONIA was chosen because it truly reflects real market interest rates but it is calculated compounded daily in arrears to more accurately reflect the time value of money. We will all have to start getting used to calculating daily compounded-in-arrears interest.
The final deadline of 31 December 2021 is now confirmed and the Bank of England and the Financial Conduct Authority are encouraging everyone to start the transition sooner rather than later. 2TIX LTD has been closely tracking the progress of SONIA transition and can support your organisation understand the complexities and help you implement this change.
SONIA is published by the Bank of England every day but daily-compounding-in-arrears is quite tricky without access to a special calculator. Abovo-Consult and 2TIX LTD have developed a unique Loan Portfolio Calculator for accrued Interest.
Whether you need support for a new SONIA loan, or conversion of an existing loan from LIBOR to SONIA, we can help. In addition to helping you understand the technical complexities, we can assist your treasury team prepare for the practical changes:
We can help you implement the effect of this change on your business planning:
Over the next few months we will be sending out a regular Best Practice newsletter to keep you up to date about progress towards SONIA Transition. Written in plain English it will help you learn the new terminology and gain an inside track on emerging issues
The transition to SONIA is going to absorb valuable time. We offer a variety of training services to help make your life easier:
In addition to training we can offer support in many ways including telephone support for ad-hoc queries. For formal settings we offer a video meeting (or Board attendance when possible). We can provide you with ready-made Board papers / committee papers explaining the issues and the necessary paperwork. If you prefer to present this change to your Board yourself we can offer a pack of ready-made slides.
In the section below you can download worked examples and a Glossary of the new jargon.