The Aldermore Transition Rate is linked to Bank of England base rate (BBR) and came into effect in March 2021 following the active transition from the previous Aldermore Reference Rate ahead of the market wide cessation of the London Interbank Offered Rate (LIBOR) in December 2021.

The Aldermore Transition Rate is calculated as the average of the last 8 weeks BBR plus a 0.06% credit adjustment spread. This rate is then rounded up to the nearest 0.50%.

This rate is comparable to the previous Aldermore Reference Rate which was calculated as the average of the last 8 weeks “3 month LIBOR” interest rate rounded up to the nearest 0.50%.

The addition of the 0.06% credit adjustment spread in the Aldermore Transition Rate is required because 3 month LIBOR and BBR were not historically identical and an adjustment to BBR was required to make it comparable to LIBOR. This adjustment was calculated in March 2021 using the 5 year historical median value between LIBOR and BBR. The credit adjustment spread is being used in line with regulatory guidance.