Reference rate from EONIA to €STR
Since 1 October 2019, EONIA is calculated with reference to €STR, plus a spread of 8.5 basis points as determined by the European Central Bank (ECB). €STR will replace the function of the current reference rate EONIA over time since EONIA will no longer be published as of 3 January 2022. The main reason for the regulator to replace EONIA with €STR is derived from the fact that reference rates must be robust and reliable. This requires a reform of the current reference rates and the introduction of new reference rates in order to increase objectivity. With that in mind, the ECB has developed €STR.
What is the difference between EONIA and €STR?
€STR is based on broader support than EONIA, since EONIA is exclusively based on lending transactions between banks. The calculation of €STR is based on data from actual borrowing transactions with other banks, money market, investment-, pension funds and central banks. This provides a reliable representation of the price at which unsecured money is borrowed throughout the Euro area.
Since 2nd October 2019, EONIA for day T is available every TARGET day on T+1, at or shortly after 09.15 Brussels time. This timing prevents market participants from being exposed to any additional EONIA re-fixing, should there be a €STR re-fixing.
€STR is published at 08:00 CET on the next business day (T+1) by the ECB. If errors are detected following the publication of €STR that affect €STR by more than 2 basis points, the ECB will revise and re-publish €STR on the same day at 09:00 CET. No changes will be made to €STR after that time.
What impact does this have on your products?
From 1 October 2019, EONIA is a derived from €STR. As for now, financial products based on EONIA remain available and your current interest rate agreements remain unchanged. In the coming period current agreements might be converted to the new €STR. We will contact you about this.
Do you want to know more?
You can find more information about reference rates at rabobank.com/replacement-of-benchmarks-for-interest-rates. Or contact your relationship manager. We like to help you.