QUICK DEFINITION
SOFR is the Secured Overnight Financing Rate, a broad measure of the cost of overnight borrowing collateralized by U.S. Treasury securities.
WHY IT MATTERS
Why SOFR matters in bond markets
SOFR is a key reference rate for U.S. dollar derivatives and floating-rate instruments after the transition away from LIBOR.
MARKET CONTEXT
How to think about it
Bond investors use sofr as part of a wider framework that links prices, yields, cash flows, liquidity and risk. The concept should therefore be read together with its related terms rather than as an isolated definition.
Is SOFR important for fixed-income investors?
← Back to the Bond Market Glossary Yes. SOFR is a key reference rate for U.S. dollar derivatives and floating-rate instruments after the transition away from LIBOR.