For decades floating-rate Eurobonds paid coupons linked to LIBOR, the London Interbank Offered Rate. After manipulation scandals and a decline in the underlying interbank lending, regulators moved markets to alternative rates. Most LIBOR settings stopped being published at the end of 2021, and the last US dollar settings ended in 2023.
The replacements
| Currency | Risk-free rate |
|---|---|
| US dollar | SOFR (Secured Overnight Financing Rate) |
| Sterling | SONIA (Sterling Overnight Index Average) |
| Euro | €STR (Euro Short-Term Rate); EURIBOR continues to be published |
| Swiss franc | SARON |
| Japanese yen | TONA |
Compounding in arrears
Because these are overnight rates, new floating-rate notes typically compound the daily rate over the interest period and fix the coupon shortly before payment, rather than knowing the rate at the start of the period as with LIBOR.
General information only, not investment advice.