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SOFR. Secured Overnight Financing Rate ( SOFR) is a secured overnight interest rate. SOFR is a reference rate (that is, a rate used by parties in commercial contracts that is outside their direct control) established as an alternative to LIBOR. LIBOR had been published in a number of currencies and underpins financial contracts all over the world.
3-month LIBOR is generally a floating rate of financing, which fluctuates depending on how risky a lending bank feels about a borrowing bank. The OIS is a swap derived from the overnight rate, which is generally fixed by the local central bank. The OIS allows LIBOR-based banks to borrow at a fixed rate of interest over the same period.
A customer borrows $25,000 from a bank; the terms of the loan are (six-month) SOFR + 3.5%. At the time of issuing the loan, the SOFR rate is 2.5%. For the first six months, the borrower pays the bank 6% annual interest: in this simplified case $750 for six months.
Libor. Libor gets its name from the City of London. The London Inter-Bank Offered Rate ( Libor / ˈlaɪbɔːr /) [ a] was an interest rate average calculated from estimates submitted by the leading banks in London. Each bank estimates what it would be charged were it to borrow from other banks. [ 1][ b] It is the primary benchmark, along with ...
Swap rate. For interest rate swaps, the Swap rate is the fixed rate that the swap "receiver" demands in exchange for the uncertainty of having to pay a short-term (floating) rate, e.g. 3 months LIBOR over time. (At any given time, the market's forecast of what LIBOR will be in the future is reflected in the forward LIBOR curve.) Analogous to ...
Floating rate notes ( FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like SOFR or federal funds rate, plus a quoted spread (also known as quoted margin ). The spread is a rate that remains constant. Almost all FRNs have quarterly coupons, i.e. they pay out interest every three months.
Though the London Interbank Offered Rate (LIBOR), the Secured Overnight Financing Rate (SOFR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows: The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
As you look at Q2 financial highlights, book value $12.39 per diluted share, GAAP net income of $213 million or $0.43 per diluted share, earnings available for distribution $231 million or $0.47 ...