SOFR
- March 17, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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SOFR
Subject : Economics
Context : SBI and IOCL ink $100 million first SOFR linked deal in the ECB market.
Concept :
- The secured overnight financing rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London interbank offered rate (LIBOR).
- SOFR is based on transactions in the Treasury repurchase market and is seen as preferable to LIBOR since it is based on data from observable transactions rather than on estimated borrowing rates.
- While SOFR is becoming the benchmark rate for dollar-denominated derivatives and loans, other countries have sought their own alternative rates, such as SONIA and EONIA.