UK banking group NatWest announced on Tuesday it has completed a SONIA (Sterling Overnight Index Average) loan for its corporate customer National Express. According to NatWest, the loan has been provided as a committed Revolving Credit Facility. Ashurst LLP acted as legal adviser to the bank in this transaction. The bank claimed:
“The loan is the first in the pilot the bank is running with a small number of customers, before launching the product to the wider market later this year in response to calls from the Financial Conduct Authority (FCA) to accelerate the transition away from LIBOR (London Interbank Offered Rate) to Risk-Free Rates by the end of 2021.”
Bhavin Shah, Head of LIBOR Transition for Commercial Banking at NatWest, spoke about the loan by stating the following:
“Financial markets have already seen an initial shift towards SONIA as a reference rate, such as the bond amendment recently carried out by Associated British Ports, where NatWest Markets acted as Solicitation Agent. As the UK’s biggest supporter of businesses, it’s important that NatWest is at the forefront of this shift in the lending market. Since the FCA welcomed our initial announcement, we’ve seen high levels of interest from customers and across the wider industry. We are pleased to be working with National Express on the next stage of the transition away from LIBOR through this pilot.”
Simon Jenkins, Senior Director, Corporate Coverage at NatWest then added:
“The development of the SONIA lending market not only requires financial institutions to develop their products accordingly, but also requires corporates to be innovative in their approach and embrace SONIA-related change. By working in partnership with first movers such as National Express, NatWest is developing a range of solutions to support customers seeking to transition away from LIBOR.”