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Eonia Spike Puts Spotlight Back on Unsecured Benchmarks

Euro Overnight Index Average surged late last month on light volume.

By Alexandra Harris, Bloomberg | Updated on December 11, 2017

While the storm surrounding Eonia has come and gone, its sudden spike higher in late November is raising fresh questions over how to replace Libor and its variants, the ubiquitous borrowing benchmarks set to be phased out.

Eonia, which is derived from actual overnight unsecured lending between banks, surged 12 basis points in the two days leading up to the end of November, sending the fixing to the highest since March 2016. The spike was likely exacerbated by paltry underlying volume of just 5.7 billion euros ($6.7 billion), analysts say, about a third of the average over the previous five years.

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