On 18 May 2021, the Working Group on Sterling Risk-Free Reference Rates published a statement recommending the use of overnight SONIA, compounded in arrears, as the successor rate recommended to replace GBP LIBOR for the purposes of the operation of fallbacks in bond documentation that envisage the selection of a recommended successor rate.

The Working Group’s recommended successor rate is intended solely for bond documentation referencing GBP LIBOR that contains contractual fallbacks which result in the selection of a recommended successor rate as a fallback. Where relevant, regard should also be had to the Working Group’s recommendation in September 2020 of a credit adjustment spread methodology when calculating the credit adjustment spread which should then be applied to the recommended successor rate for contractual fallbacks in cash market products referencing GBP LIBOR.