Benchmark Rate Calculator
Compute the compounded or simple average of SOFR, €STR, or SONIA for any interest period.
Example: A floating-rate loan of $10,000,000 referenced to 3-month compounded SOFR in arrears for Q1 2024 (1 Jan – 31 Mar 2024) would use a compounded SOFR of approximately 5.32% — slightly different from the simple average of 5.33% due to the daily reinvestment effect.
ISDA SOFR compounding conventions
Source: NY Fed (via FRED), European Central Bank, Bank of England · Rolling — latest published observation · last verified 2026-08-29
How benchmark rate compounding works
SOFR, €STR, and SONIA are overnight rates — each business day a single rate is published, representing the cost of borrowing cash overnight in that currency. Floating-rate loans and derivatives that reference these rates typically use a compounded average over the interest period rather than a simple average. Compounding reflects the fact that interest earned each day is reinvested, so the effective rate for a period is slightly higher than the arithmetic mean of daily rates when rates are rising, and slightly lower when they are falling.
The compounding formula used here follows the ISDA and ARRC standard: each overnight rate applies for its actual number of calendar days (1 for a weekday, 3 for a Friday covering the weekend), and the product of all daily accrual factors is converted back to an annual rate using the applicable day count convention — ACT/360 for SOFR and €STR, ACT/365 for SONIA. The data is refreshed from official sources each weekday at 10:00 UTC, after all three central banks have published their daily fixing. For late payment interest calculations under contracts referencing these rates, use the compounded average method.
Frequently asked questions
- What is SOFR?
- SOFR (Secured Overnight Financing Rate) is the overnight benchmark rate for US dollar transactions, published daily by the Federal Reserve Bank of New York. It replaced USD LIBOR, which was retired in June 2023. SOFR is based on actual transactions in the US Treasury repurchase (repo) market and is considered a nearly risk-free rate.
- What is €STR?
- €STR (Euro Short-Term Rate) is the overnight benchmark rate for euro transactions, published daily by the European Central Bank. It replaced EONIA and is based on overnight unsecured lending transactions by banks in the euro area. It has been published since 2 October 2019.
- What is SONIA?
- SONIA (Sterling Overnight Index Average) is the overnight benchmark rate for sterling transactions, published daily by the Bank of England. It replaced GBP LIBOR and is based on actual overnight unsecured lending transactions in the sterling market.
- Why use compounded instead of simple average?
- Most floating-rate loans and derivatives that reference SOFR, €STR, or SONIA specify compounded-in-arrears averaging — this is the ISDA and ARRC recommended convention. The compounded rate reflects daily reinvestment and is slightly higher than the simple average in a rising rate environment. Simple average is occasionally used in legacy contracts or for simplicity; spot rate is useful for checking the rate on a specific date.
- What day count convention does each rate use?
- SOFR and €STR use ACT/360 (actual calendar days divided by 360). SONIA uses ACT/365 (actual calendar days divided by 365). These are fixed conventions for each rate and are applied automatically by this calculator.
- Can I use this in my own application?
- Yes — every calculator on Stupidly Clever has a matching REST API and MCP tool that runs the same underlying logic.