A type of SOFR (secured overnight financing rate) that represents an average of the daily overnight SOFR rate over 30-, 90-, and 180-days on a compounded basis. The SOFR averages reflect movements in interest rates over a certain period, but averaging has the effect of smoothing out day-to-day volatility in market rates over that period.

Averaging also contribute to the ease with which financial contracts can be referenced with a benchmark that better correspond to smoothed changes in the basic financing rates (e.g., futures, swaps and floating-rate loans).

SOFR averages are consistently calculated across different time periods and are published for respective sectors, these averages provide an attractive and reliable tool for borrowers to use (following the LIBOR transition process).