Also known as Daily Simple SOFR in Arrears, the simple (not compounded) rate that accrues during the interest period and is based on the Secured Overnight Financing Rate (SOFR). Daily Simple SOFR is used in the US loan market as a replacement reference rate for USD LIBOR, which has been phased out as a reference rate.

The Alternative Reference Rates Committee (ARRC) has identified SOFR as the most suitable alternative reference rate for USD LIBOR. According to market commentators, Term SOFR is the preferred replacement rate for LIBOR among US syndicated loan market participants, although Daily Simple SOFR is also being used. Other USD LIBOR-alternative reference rates include credit sensitive rates, such as BSBY and Ameribor.

For more information on Daily Simple SOFR and LIBOR transition, see Practice Note, What's Market: LIBOR Interest Rate Provisions.