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The other difference is that LIBOR is a forward-looking rate, whereas SOFR (unless you have Term SOFR) is a backward looking rate (i.e. that is for LIBOR you kn
by gadders 5y ago
The other difference is that LIBOR is a forward-looking rate, whereas SOFR (unless you have Term SOFR) is a backward looking rate (i.e. that is for LIBOR you know at the start of the month what rate you will pay for the following month, whereas with SOFR you don't know the rate until the end of the interest period [or 5 days before in the case of lookback])
- JackFr 5y agoAnd the SOFR is only an overnight rate. There is no official Term SOFR. The CME has forward SOFR contracts for 1, 3, 6 and 12 months -- which are not really the same thing, but if you squint hard you can treat them kind of like forward looking term rates.