Create a Subsidy Loan

A subsidy loan is a debt transaction subscribed by an entity with one counterparty (internal or external, the lender) at a given interest rate. Its details include: the principal amount, the interest rate, the repayment date, etc.

Subsidy loans have one initial drawing, equal to the loan principal, an interest payment schedule and an amortization schedule. The related periods, payment dates, interest calculations and amortization modes can be very simple or sophisticated. Subsidy loans can be associated with a subsidy table, which includes details on how the interest paid can be subsidized.

Navigate to the Debt & Derivatives Application
  1. Log in to your Fairways Debt account.
  2. Select a customer account.
  3. Navigate to Applications Applications.png > Debt & Derivatives.
Create a Subsidy Loan
  1. Click Add Transaction > Loan > Subsidy Loan.

DebtDerivatives_Portfolio_Loan_Subsidy_EN.png

  1. Complete the form with all relevant details.

Note: Fields marked with an asterisk * are mandatory.

Field Description
Reference Code

Unique reference of the transaction. Identifies the transaction in the portfolio.

Note: The reference must be unique among all the entities managed in the account.

External Reference Code Used by external systems to identify the transaction. Used when transactions are imported from or exported to another system.
Principal Principal amount of the loan.
Currency Currency of the principal amount.
Borrower Borrowing entity in the system. Only entities in the current organization can be managed by the current user.
Lender Can be either internal (an entity in the system) or external (a commercial bank).
Subsidy Table Calculation defining the amount paid by the borrower and the amount paid by a third party at each interest payment.
Activation Date

Activation date of the subsidy, if different from the start date of the loan.

DebtDerivatives_Loan_Subsidy_Transaction_EN.png

Field

Description

Trade Date

Date at which the transaction has been traded. From that date, the system takes the transaction into account as an item of the portfolio.

Start Date

Unadjusted start date of the transaction.

Note: The start date must be later or equal to the trade date.

End Date

Unadjusted end date of the transaction.

Note: The end date must be later than the start date.

First Roll Date

Unadjusted date of the first payment (useful when the first period is a long or short stub).

Note: The first roll date must be later than the start date and earlier than the end date.

DebtDerivatives_Loan_Subsidy_Date_EN.png

Field

Description

Availability Period

Indicates if the loan includes drawings and amortization:

  • No: The full principal is drawn at the start of the transaction.
  • Yes, with amortization: The principal is drawn over a period of time (multiple drawdown dates) and the principal is amortizing.
  • Yes, without amortization: The principal is drawn over a period of time (multiple drawdown dates).

Notes:

  • You cannot edit this field once you created the loan.
  • Additional fields display depending on the selection.

End of Availability Period

Note: This field displays if the availability period is enabled.

Indicates the last date at which drawings can be made.

Note: If the availability period is enabled with no amortization, the end of availability period must be earlier than the end date.

DebtDerivatives_Loan_Subsidy_AvailabilityPeriod_EN.png

Field

Description

Amortization Type

Amortization mode.

Consolidation Start Date

Note: This field is only available for drawings with amortization.

Indicates the date at which amortization can start.

Extended Constant Annuity Date

Note: This field displays if extended constant annuities are selected as amortization type.

Indicates the date until which constant annuities will be computed (a transaction with a maturity date corresponding to the extended constant annuity date would amortize to zero at this date).

DebtDerivatives_Loan_Subsidy_Amortization_EN.png

Field

Description

Index

Name of the index used to calculate the rate value, e.g. FIXED for a fixed rate.

Note: The field beside displays depending on the index selected.

Only a fixed index can be defined if constant annuities or extended constant annuities are selected as the amortization type.

Interest Rate

Fixed rate value in percentage.

Note: This field displays depending on the index selected.

Initial Interest Rate

Initial rate of the custom index.

Note: This field displays depending on the index selected.

Spread

Spread (or margin) value in percentage.

Note: This field displays depending on the index selected.

Day Count Convention

Used to compute the day fraction of an interest accrual period.

Capitalized Interest

Defines whether the interest amount should be paid at the payment date, or added to the principal (and included into the outstanding balance for the following periods).

DebtDerivatives_Loan_Subsidy_Indexation_EN.png

Field

Description

Frequency

Frequency of the payments.

Interest Calculation Adjustment

Adjustment mode for the interest calculation. The nominal start and end dates of the accrual period will be adjusted accordingly before computing the interest amount.

Payment Date Adjustment

Adjustment mode for the payment date.

Last Stub Period

Defines whether the last period should be a short or long stub when it does not match the selected frequency:

  • Short Stub: The payment date just before the end date should be respected.
  • Long Stub: The payment date just before the end date is replaced with the payment occurring at the end date.

Note: If neither stub is selected, the short stub applies by default.

DebtDerivatives_Loan_Subsidy_Payment_EN.png

Enter the required custom attributes, if any.

  1. Enable Show Details after Validation to automatically open the new subsidy loan profile once created.
  2. Click OK to create the subsidy loan.

The new subsidy loan displays in the draft portfolio.

DebtDerivatives_Loan_Subsidy_Created_EN.png

Adjustment

Adjustment modes define how the system rolls dates in case of holidays in the calendar.

Field Description
Unadjusted Not rolled.
Preceding Rolled to the previous business day.
Following Rolled to the next business day.
Modified Preceding Rolled to the previous business day, only if that day occurs in the same month. Otherwise, rolled to the next business day.
Modified Following Rolled to the next business day, only if that day occurs in the same month. Otherwise, rolled to the previous business day.
End of Month (unadjusted) Rolled to the last day of the month.
End of Month (preceding) Rolled to the last day of the month, then adjusted to the previous business day.
Modified Following (year)

Rolled to the next business day, only if that day occurs in the same year. Otherwise, rolled to the previous business day.

 

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