SOFR (Secured Overnight Financing Rate)

SOFR is the US benchmark interest rate that replaced LIBOR, based on the actual cost of borrowing cash overnight using US Treasury securities as collateral. Unlike LIBOR, which relied on bank estimates, SOFR is derived from real, observable transactions, which makes it much harder to manipulate.

SOFR now underpins most new floating-rate loans, bonds, and derivatives issued in the US, including many corporate credit facilities that companies rely on to fund operations, making it one of the quiet but foundational rates behind modern corporate borrowing costs.