Finding the balance between credit-based and risk-free benchmarks While we expect that BBSW will remain a robust benchmark, it is important for market participants to ask whether BBSW is the most appropriate benchmark for their financial contracts. This is particularly worth considering in the light of the transition that is taking place away from LIBOR towards risk-free rates.
For some financial products, it can make sense to reference a risk-free rate instead of a creditbased benchmark. For instance, floating rate notes (FRNs) issued by governments, non-financial corporations and securitisation trusts, which are currently priced at a spread to BBSW, could instead tie their coupon payments to the cash rate.