Term SOFR
Private Credit glossary · Documentation, Covenants & Terms
Definition
Forward-looking SOFR for specific tenors (1M, 3M, 6M).
Term SOFR in plain English
SOFR is a widely used benchmark interest rate — think of it as the going 'base price' of borrowing that lots of loans are pegged to. Plain SOFR is a daily, backward-looking number, which is awkward if you want to know your interest cost for the next three months in advance. Term SOFR fixes that by publishing a forward-looking rate for set time windows — 1, 3, or 6 months — so a borrower can lock in and know exactly what they'll owe for that stretch, the way a fixed quote lets you budget instead of waiting to see the final bill.
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