Yearlong Effort to Replace Libor in Bonds May Reward Banks
- EIB sold first benchmark note tied to U.K.’s Libor replacement
- Bank of England gauge may become norm for sterling floaters
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It took a full year for banks to design and sell a bond tied to the U.K.’s replacement for Libor. Now the pioneers of that deal are preparing to use it as a model for a much broader client base.
They may have uncovered a lucrative opportunity. Such was the strength of demand when the European Investment Bank sold the Sonia-linked notes last month that it was able to raise 1 billion pounds ($1.3 billion), from a mooted target of at least 250 million pounds. Order books on the deal, which was arranged by HSBC Holdings Plc, NatWest Markets, Royal Bank of Canada and TD Securities Inc., closed above 1.55 billion pounds. The securities strengthened in the secondary market after the sale.