A bond is a debt issued by a party to the market. It is evidenced by a note specifying: the principal amount, the interest rate, the repayment date, etc.
In terms of schedule and interest computation, a bond is similar to a standard loan.
In Fairways Debt, the bond counterparty is a generic counterparty called MARKET.
Prerequisite
- Enable the Bond transaction type (contact your Finance Active consultant)
Navigate to the Debt & Derivatives Application
- Log in to your Fairways Debt account.
- Select a customer account.
- Navigate to Applications > Debt & Derivatives.
Create a Bond
- Click Add Transaction > Security > Bond.
- Complete the form with all relevant details.
Note: Fields marked with an asterisk * are mandatory.
Field |
Description |
---|---|
Reference Code |
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. |
Bond Type |
Type of the bond. |
Principal |
Principal amount of the transaction. |
Currency |
Currency of the principal amount. |
Issuing Price |
Computes the initial bond premium. An issuing price of 100% means that there is no initial bond premium. |
Issuer |
Issuer entity in the system. |
Issuing and Paying Agent |
A third party, usually a commercial bank, which accepts the payments from the issuer and then distributes the related amount to the holders of the bond. |
Consumer Price Index |
Note: These fields are only available for inflation linked bonds. Measures the weighted average of prices of a basket of consumer goods and services. |
Basis Index |
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. |
End Date |
Unadjusted end date of the transaction. |
First Roll Date |
Unadjusted date of the first payment (useful when the first period is a long or short stub). |
Field |
Description |
---|---|
Amortization Type |
Amortization mode. |
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). |
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 in the outstanding balance for the following periods). |
Field |
Description |
---|---|
Frequency |
Frequency of the payments. |
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. |
|
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:
Note: If neither stub is selected, the short stub applies by default. |
Enter the required custom attributes, if any.
- Enable Show Details after Validation to automatically open the new transaction profile once created.
- Click Apply to create the bond.
The new bond displays in the draft portfolio.
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. |