SOFR

SOFR, the Secured Overnight Financing Rate, is "a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities". The Federal Reserve Bank of New York publishes it each business day at about 8:00 a.m. New York time (New York Fed). It replaced US dollar LIBOR as the main short-term benchmark for US dollar contracts.

SOFR vs term SOFR

SOFR itself is an overnight rate that is known only after the fact. Term SOFR is a forward-looking rate for a set period, such as one month, derived from SOFR futures markets. CME Group publishes it (CME Term SOFR). Contracts that need to know a rate at the start of a period, such as a monthly dividend, tend to use term SOFR.

How it applies to STRC

The STRC certificate of designations uses one-month term SOFR in two ways (8-K, 29 July 2025):

1. Floor: Strategy may not set the monthly rate below one-month term SOFR on the business day before it gives notice.
2. Cut limit: a cut may not exceed 25bp plus the amount by which one-month term SOFR fell during the prior period.

STRC's rate was 12.00% for November 2026 record dates (announced 15 October 2026), well above any recent SOFR level. As a result, the floor is not currently the binding limit.

How it applies to SATA

SATA's terms use "monthly SOFR" in the same two roles, a floor and a cut limit, alongside price conditions (424B5, 7 November 2025).

Why it matters

The SOFR floor links the minimum possible dividend on these instruments to US short-term interest rates. If US rates rise, the floor rises with them. If they fall, the floor falls too. The floor limits how far the rate can be cut. It does not set the rate the issuer actually chooses.

What to check in the filing

• Which SOFR measure is referenced (overnight, monthly average, one-month term)
• The observation date
• What happens if the benchmark stops being published