SOFR
Business & Finance abbreviation · Bond & Fixed-Income
| Stands for | Secured Overnight Financing Rate |
|---|---|
| Categories | Business & Finance |
SOFR stands for Secured Overnight Financing Rate, a bond & Fixed-Income abbreviation.
US benchmark interest rate measuring the cost of borrowing cash overnight with Treasury securities as collateral, calculated from actual repo transactions and published daily by the Federal Reserve Bank of New York. It replaced LIBOR as the main reference rate for dollar loans and derivatives.
Example: The commercial loan carries interest at term SOFR plus 2.25 percent.
Usage notes
Pronounced "SO-fer." SOFR rests on more than $2 trillion of daily transactions, making it far harder to manipulate than LIBOR. Because it is an overnight, nearly risk-free rate, lenders use compounded SOFR in arrears or forward-looking "term SOFR" published by CME Group. The Alternative Reference Rates Committee selected it in 2017.
Related abbreviations
More bond & Fixed-Income abbreviations
- MBS – Mortgage-backed security
- MTN – Medium-term note
- NRSRO – Nationally recognized statistical rating organization
- OAS – Option-adjusted spread
- OAT – Obligation assimilable du Trésor (French Treasury bond)
- OIS – Overnight index swap
- SONIA – Sterling Overnight Index Average
- STRIPS – Separate Trading of Registered Interest and Principal of Securities
- T-bill – Treasury bill
- T-bond – Treasury bond
- T-note – Treasury note
- TIPS – Treasury Inflation-Protected Securities