Libor to Sofr Transition Calculator

LIBOR transition adjusts rate. This calculator sizes the impact.

Balance

Old LIBOR rate %

New SOFR rate %

ARR spread bps

Remaining years

Transition impact (annual)

$11,088

Effective new rate %

5.31%

Lifetime impact

$55,440

How the math works

Effective new rate = SOFR + ARR spread. Annual impact = balance × rate delta. Lifetime = annual × years.

Double-check that ARR adjustment was applied correctly at transition. Some legacy contracts default to ISDA adjustments; others use ARRC; a few used negotiated spreads. A 5 bps error on a $20M loan compounds to $50k over 5 years — worth a 30-minute document review.

How to Use

Enter loan balance.
Enter old LIBOR rate %.
Enter new SOFR rate %.
Enter ARR spread adjustment bps.
Enter remaining years.
Read transition impact.

Frequently Asked Questions

ARR adjustment?

Alternative Reference Rate (ARR) adjustment: SOFR + static spread to approximate LIBOR economics. ISDA/ARRC standard: 1m-11.448 bps, 3m-26.161 bps, 6m-42.826 bps. These are hardcoded via fallback language.

Contract language?

Legacy floating-rate notes with LIBOR must have fallback language or be amended. Most were amended during 2022-2023 transition. Check loan docs for post-transition rate mechanics. Sometimes parties negotiated alternate spreads during amendment.

SOFR variants?

Term SOFR (forward-looking, common for new loans). Daily SOFR (backward-looking, common for existing). Compounded SOFR (used in some structured finance). Each has slightly different economics for borrower cash flow predictability.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.