Sometimes referred to as "bips." A basis point is one one-hundredth of a percent (0.01%). For example, 100 basis points equals 1.0%. The term is often used in finance transactions in connection with the calculation of fees and changes in interest rates for derivatives contracts, as well as yields on fixed-income obligations such as asset-backed securities (ABS).

Example: Term SOFR plus 25 basis points = Term SOFR plus 0.25%.