SOFR vs SONIA: Comparing Global Overnight Rates
SOFR vs SONIA: Comparing Global Overnight Rates
As the financial world transitions away from LIBOR, two overnight rates have emerged as the primary benchmarks for the world's two largest currency markets: SOFR (Secured Overnight Financing Rate) for USD and SONIA (Sterling Overnight Index Average) for GBP.
Key Differences
| Feature | SOFR | SONIA |
|---|---|---|
| Currency | US Dollar (USD) | British Pound (GBP) |
| Administrator | Federal Reserve Bank of New York | Bank of England |
| Underlying Market | Secured (Treasury repo) | Unsecured (interbank lending) |
| Daily Volume | ~$1 trillion | ~£50 billion |
| Publication Time | 8:00 AM ET (T+1) | 9:00 AM UK (T+1) |
| History | Since April 2018 | Reformed October 2017 |
Secured vs Unsecured
The most fundamental difference is that SOFR is a secured rate based on Treasury repurchase (repo) transactions, while SONIA is an unsecured rate based on overnight interbank lending. This means:
- SOFR tends to be slightly lower because the collateral (US Treasuries) reduces credit risk
- SONIA captures the pure credit cost of unsecured interbank lending
- SOFR can exhibit quarter-end and year-end spikes due to repo market dynamics
Which Rate Matters for You?
If you're working with GBP-denominated instruments — loans, swaps, bonds, or mortgages — SONIA is your benchmark. For all USD-denominated instruments, SOFR is the standard. Our platform provides historical data and calculators for both rates, making cross-currency analysis straightforward.