Defining Amortization Functionality for IRP and IR Swap Deals
The information in this topic describes amortization functionality that is common only to IRP and IR swap deals.
Page Name |
Definition Name |
Usage |
---|---|---|
Deal Detail Page |
TRX_DETAIL_TR |
Define the conditions for amortizing an IRP or IR swap deal. See the Deal Detail Page for more information. |
Interest and Payment Dates Page |
TRX_INTEREST_TR |
View detailed information about payment dates. See the Interest and Payment Dates Page for more information. |
Before you specify amortization methods for an IRP deal, the following conditions must be set on the Deals Detail page for an IRP deal:
The Discount/Premium field value on the Deal Detail page must be Straightline.
The Same Interest each Period option must be selected in the Interest Calculation section.
Fixed-rate deals, which you define by selecting Fixed in the Rate Type field, can use an amortization method of Constant Term, Constant Payment, or Factored. You select the amortization method from the Amort Method field menu.
Floating rate deals, which you define by selecting Floating in the Rate Type field, can use only the Factored amortization method.
You cannot use the constant term and constant payment amortization methods with floating-rate deal types because the interest rate changes on a frequent basis.
This table describes the options for IRP deals:
Amortization Method |
Rate Type |
Interest Calculation |
---|---|---|
Constant Term/Payment Note: You cannot use the constant amortization methods for floating-rate deals. |
Fixed |
Same Interest each Period |
Factored |
Fixed |
Either of the following options:
|
Factored |
Floating |
Day Counted Interest |
Entering amortization methods for IR swap deals is similar to the process that you use for IRP deals.
For you to specify amortization methods for an IR swap deal, the Interest Calculation field in the Interest Rate Swap Details section of the Deal Detail page must be set to Interest Bearing, and the following conditions must be met:
Amortization Method |
Rate Type - Leg 1 |
Rate Type - Leg 2 |
Interest Calculation (Specified on the Dates Page) |
---|---|---|---|
Constant Payment / Term Selected in the Amort Method field. Note: You cannot use a constant payment or a constant-term amortization method if either leg is set to Floating. |
Fixed |
Fixed |
Same Interest each Period |
Factored |
Fixed |
Fixed |
Either of the following methods:
|
Factored |
Floating |
Fixed |
For Leg 1: Day Counted Interest For Leg 2, either of the following methods:
|
Fixed Paydown |
Fixed |
Fixed |
Either of the following methods:
|
Fixed Paydown |
Floating |
Fixed |
For Leg 1: Day Counted Interest For Leg 2, either of the following methods:
|
Use the Deal Detail page (TRX_DETAIL_TR) to define the conditions for amortizing an IRP or IR swap deal.
Navigation:
Field or Control |
Description |
---|---|
Amort Method (amortization method) |
Select the method for amortizing the principal to zero or an end principal. Values are:
|
Use the Deal Detail page (TRX_DETAIL_TR) to specify an IR swap amortization method.
Navigation:
This page is similar to the Deal Detail page for IRP deals; however, the two regions, the Pay region and the Receive region, exist for both sides of the swap.
Note: For definitions of the payment results of the constant or factored amortization method, see the section that covers amortization for IRP deals. This discussion focuses on using these amortization methods with an IR swap deal.
Select a method of amortization from the following values:
Field or Control |
Description |
---|---|
Constant Payment or Constant Term |
When you select one of these values, the End Principal fields for the Pay and Receive regions appear on the Deal Detail page with a 0 value by default; you can edit these fields. |
Factored |
When you select this value, the Beginning Amount and End Amount fields are unavailable. You must complete the setup for this factored swap on the Amortization Details page. The factors can be added on the Interest and Payments pages. |
Fixed Paydown |
Select this amortization method to make changes to the principal balance (after the system has generated the payment schedule) by amount or percentage. When you select this value, the Percent/Amount fields for the Pay and Receive regions appear on the Deal Detail page. |
Use the Interest and Payment Dates page (TRX_INTEREST_TR) to view detailed information about payment dates.
Navigation:
Click Interest Dates on the Deal Detail page.
Access the Interest and Payment Dates page (click Interest Dates on the Deal Detail page).
This page displays comprehensive, payment-information results for a Constant, Factored, or Fixed Paydown method type amortization. If you selected the Constant method on the Deal Detail page, no further setup is required. However, if you selected the Factored or Fixed Paydown method, you must enter a value so that the system can correctly calculate the factored or fixed-paydown amortization amount. Values are:
Field or Control |
Description |
---|---|
Factored |
To enter a factored value:
|
Fixed Paydown |
To edit the fixed-paydown, principal amount:
|