A method for calculation of SOFR (secured overnight financing rate) that involves a daily compounding of the rate on an average basis for the corresponding tenor/ term (1 week, 1, 3, 6 or 12 months.) A administrative agent determines the basic rate and the calculation methodology/ convention (e.g., compounding in arrears with a lookback and/ or suspension period as a basis for determination of the interest amount payable prior to the end of each interest period, etc.)
Daily SOFR may be simple (daily simple SOFR or compounded (daily compounded SOFR).
The compounded SOFR (and the simple SOFR) is a version of the adjusted SOFR (for USD IBOR institutional cash fallbacks in arrears)- that is, the average of daily SOFR over the interest accrual period (following the publication of a LIBOR setting).
