Renewal Policies

All non-derivatives transactions support renewal policies. This is very useful for long-term planning when you want to analyze your future positions, including the transactions that are not yet negotiated but will be carried out to refinance an existing debt.

There are four settings for the renewal policy:

  • Not Renewed: No renewals set for the transaction.
  • Renewed on an Ongoing Basis: The system will roll the transaction on an ongoing basis, using the initial maturity and the configured index.
  • Renewed Once: The system will simulate a forward transaction starting at the maturity date of the renewed deal, and maturing at the given date.
  • Renewed x Times: The system will roll the deal the given number of times, using the initial maturity and the configured index.

In addition, you can renew bonds and loans with straight-line amortization by activating the Renew Amortized Transaction option. This option generates a renewed transaction for each remaining payment period of the schedule, with the start date being equal to the following payment date and the end date equal to the transaction maturity date. Then, the renewal policy applies as usual.

You can define renewal policies at the entity and transaction levels:

  • Entity level: You can define a default renewal policy for all the fixed rate financing transactions, and another one for all the floating rate financing transactions. The default policy will apply to all the transactions in which the entity is the borrower. Only ongoing renewal policies are supported at the entity level.
  • Transaction level: You can override the default renewal policy, or set one if there are no default settings.

For envelope-based instruments (issuing programs), the renewal policy can be configured at the envelope level. In such a case, it applies to all subtransactions, e.g. certificates. You can also override this default renewal policy at the subtransaction level.

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