4.9.4 Capturing Details in the ‘Preference’ tab

Named Agent Details

System displays the following details in this section:

• Named Agent
• Name of the Named Agent

These values are defaulted from facility contract online screen when you book a new tranche.

Specifying Other Details

The following details may also be specified for a tranche:

• Suppress B. V. Payment Message

  You can suppress the generation of back value payment messages for the tranche contract, if required. You have to check this option to facilitate it.

• Net Across DD

  If on the maturity date of a drawdown, a borrower books another drawdown, you have the option of netting the payment. The netting of payment can be done for the principal, interest and fee components of the loan. To avail this option across drawdowns for cash flows within a tranche, you have to check this option. If selected, netting is allowed for the cash flows both at the borrower and participant side. Further, you can also specify the netting preferences in the Participant Ratio Details screen and the Borrower Details screen.

  The accounting entries during netting are posted to the Netting Suspense GL that you have selected in the Syndication Loans and Commitments – Branch Parameters screen.

  Example

  Given below is an example of a netting transaction:
  Consider a term loan under a revolving tranche, for which netting is required to be done. The table given below lists the cash flow on the date of the roll-over:

  Drawdown Ref. No.	Component	Currency	Amount	Cash Flow Indicator
  D1	Principal	GBP	10 million	In
  D1	Interest	GBP	2 million	In
  D1	Fee	GBP	3 million	In
  D2	Principal	GBP	10 million	Out

  The net debit amount to the borrower is 5 million.
  The following are the accounting entries:

  Dr./Cr.	Customer	GBP 5 million
  Cr.	Netting Bridge Account	GBP 5 million
  Dr.	Netting Bridge Account	GBP 5 million
  Cr.	Loan D1 (Principal)	GBP 5 million
  Dr.	Loan D2 (Principal)	GBP 10 million
  Cr.	Loan D1 (Interest)	GBP 2 million
  Dr.	Loan D1 (Fee)	GBP 3 million

  • Netting takes place only if the following parameters for a cash flow are same:
    • Tranche contract
    • Customer (Borrower/Participant)
    • Value Date – Currency
  • The settlement of a cash flow by the customer (repayments) is always be in the same currency as the drawdown in Oracle Banking Corporate Lending.
  • All cash flows on the participant side are eligible for netting. SKIM component is considered if the interest component is selected for netting.
  • Once you indicate netting is allowed for a contract, and authorize the contract, you are not allowed to amend the cash flow which has occurred as a result of the netting.
  For more information on Participant Ratio Details screen, refer the heading Specifying participant details for the tranche in this chapter.
• Cascade Participation

  This specification defaults from the tranche product. You can change your specification at the tranche level. You can check this option to indicate whether any changes to participants of a tranche contract must be propagated to all related drawdown schedules and active drawdowns.

  However, if you check the Cascade Participation option for a tranche, the system automatically converts the tranche to a Non Cascade Participation type if you process any one of the following drawdown activity:
  • Non-prorata drawdown initiation
  • Swing line drawdown initiation
  • Non-prorata pre-payment for any of the underlying drawdowns
  The system triggers the CASC event to indicate the change in the Cascade Participation attribute of the tranche. After the CASC event, the system automatically deselects the Cascade Participation option for the tranche.

  All restrictions applicable for Non-Cascade type of tranche is applicable for the converted tranche from the value date of the tranche. However, if a Participant Ratio Amendment (PRAM) has occurred for the tranche before the conversion, the restrictions are applicable from the Participant Ratio Amendment date.

  Note:

  • You are not allowed to capture a Participant Ratio Amendment instruction until you authorize the activity that resulted in the conversion.
  • Likewise, if there are unauthorized transfer instructions under a tranche, you are not allowed to perform any activity that results in conversion.
  • If you delete any of the activity that results in a conversion, the tranche reverts to the earlier state of Cascade Participation type provided the activity is the last action performed under the tranche. However, this is not applicable in the case of reversal.
• Sighting Funds Applicable

  Select this field to indicate that sighting funds is applicable for the tranche.

  Note:

  • The value for this field is defaulted from the branch; however, you are allowed to modify it before first authorization.
  • You can check this field only if the tranche is pro-rata and is of lead type.
  • If Sighting Funds is applicable for the tranche, then on selecting a drawdown product which does not have this field selected at the product level, the system throws an override stating the same and enables dual authorization.
  • If Sighting Funds is not applicable for the tranche, then those drawdown products which have this field selected at the product level are also allowed to select in the Drawdown Product sub screen. However, there is no compensatory interest calculation for such drawdowns.
• Assignment Validations Applicable

  Select this check box if assignment validations are applicable for a tranche.

  Note:

  This field is enabled only if you have selected the Transfer Type option as Secondary in Participant Transfer Details screen.
  The assignment validations are applied at the LT-LB Interface level and if any validations are met, then dual authorization is mandatory.
• Industry Code

  Specify the industry code here. The adjoining option list displays all industry codes maintained in the system. You can choose the appropriate one.

• CLP Ext Participation

  Select this check box to indicate that the external and silent participations are allowed at the tranche level. However, you can modify it.

• INIT Mode
  You can indicate the mode of initiating the tranche contract in the system. The following options are available:

  • Auto: If you select this option, the system will automatically initiate the contract on the Value Date. The event INIT will be fired on this date.
  • Semi-Auto: You can select this option to indicate that forward processing is applicable to the borrower tranche contract during the INIT event. The system processes the events, but holds the messages associated with the event.

  For more details on this screen, refer the heading Forward Event Processing in the Reference Information for Loan Syndication chapter of this User Manual.
• Part. SSI Pick Up
  You can specify the basis for picking up the SSI (Standard Settlement Instructions) Mnemonic for participants of the tranche contract. The options are given below:

  • Currency: If you select this option, the system allows you to select the SSI Mnemonic for each allowable currency for each participant in the Participant Ratio Details screen. The SSI Mnemonic selected is applicable to all the components of that participant at the tranche level.
  • Component: This option allows you to select the SSI Mnemonic for each component defined for each participant of the tranche contract. This is done in the Participant Ratio Details screen.

  For more details on this screen, refer the heading Specifying participant details for the tranche in this chapter.
• Fronting Share

  By default the Fronting Share is 100% indicating that your bank is the only fronting bank. You can specify your bank’s share of Fronting, in case of multiple fronting banks are involved.

  Note:

  The system displays the fronting share as 100% only if you have selected the ‘LC Fronting’ check box. Otherwise, it display the share as 0%.

  In case of non-lead tranches, the system directly defaults the issuers details at the DrawnDown contract. If there are multiple self-participants, the participants with the highest asset ratio is defaulted as the issuer at the DrawnDown.

  Fronting risk is computed at the tranche level during batch process as follows:

  Lead Tranche

  Fronting Risk = (Available LC Sublimit * Percent of deal that is Fronted by Self Participant (%) * Fronting Share (%)) – (Self Participant Issued LC Outstanding* Percent of deal that is Fronted by Self Participant (%)) where,
  1. Available LC Sublimit = Minimum [(Global Tranche Amount – Global Drawdown Outstanding), Global LC Sublimit]
  2. Global Drawdown Outstanding = Total Drawdown Outstanding / Global Percentage
  3. Global LC Sublimit = Borrower LC Sublimit Amount / Global Percentage
  4. Percentage of deal fronted = (100 – (Global Percentage))
  5. Self Participant issued LC outstanding = Sum of all Self Participant Issued LC’s outstanding balance for a given a tranche / Global Percentage. 6. Global Percentage = Tranche Amount / Global Tranche Amount

  Non-Lead Tranche

  Fronting Risk = (Available LC Sublimit * Percent of deal that is Fronted (%) * Fronting Share (%)) – (Self Participant Issued LC Outstanding* Percent of deal that is Fronted (%)). where,
  1. Available LC Sublimit = Minimum [(Tranche Transfer Available Amount – Drawdown Outstanding), Global LC Sublimit]
  2. Percentage of deal fronted = (100 – (Total % of the self-participants in the tranche))
  3. Self Participant issued LC outstanding = sum of all LC outstanding where Self Participant participant is selected as LC issuer.
• Administrator

  You can indicate the officer assigned to be the administrator for the borrower tranche or drawdown. By default, the primary administrator defined for the facility contract defaults here. You can change it at the tranche level.

• Agreement Title

  The customer may require a loan for a specific purpose. In this field, you can capture the reason for processing the loan. The title captured for the facility contract is displayed for the tranche as well. You can change this title for a tranche.

• Internal Remarks

  The remarks captured for the facility contract is applicable to all the tranches processed under it. You can change the remarks for a tranche, if required.

• LC Fronting

  Select this check box to indicate that the LC fronting is applicable for the tranche. If you have not selected this check box, the LC fronting value is displayed as 0 %.

  If this check box is selected, you need to go LC Issuer Mapping Details screen.
• Floor/Ceiling Restricted to Base Rate

  This is defaulted from the product maintenance whenever a new tranche is created. You can edit this before authorization or before any floor/ceiling is maintained for the tranche, After authorization you cannot edit this field.

  If this check box is selected for the tranche contract it indicates that floor/ceiling can be maintained only for base rate. If this check box is not selected it indicates that floor/ceiling can be maintained for any of the components like base rate, margin and all-in rate.

  Floor and Ceiling maintenance for base rate is done at tranche level for each currency, effective date, drawdown product and the associated interest component combination. If this check box is selected for the tranche, for each of this combination, the floor and ceiling maintenance is allowed only for base rate.

• Global LC Sublimit

  Specify the total global LC sublimit level of the tranche.

• FpML Type

  Select this check box to indicate that the FpML type is required for the tranche contract.

• Inactive
  If you have liquidated a tranche for which interest is due on the linked drawdown or fee is due on linked commitment/facility, the system selects this check box. You are allowed to perform the following operations only, on the tranche/drawdown contracts linked to an inactive tranche:

  • Liquidation of the drawdown to pay the interest due.
  • Value dated amendment on the tranche to decrease the maturity date.
  • Fee amendment on tranche.
  • Fee Rule Maintenance on tranche to capture rate.
  • Fee liquidations on tranche

  The system automatically deselects this check box during the End of Day (EOD) batch if all the below conditions are satisfied:

  • There is no fee outstanding for the tranche and commitment contract.
  • There is no interest outstanding for drawdown and loan contract.
  • Current status of the tranche is liquidated (terminated).
  • Tranche maturity date is lesser than or equal to application date.

  If the check box is deselected for the liquidated tranche then no activities are allowed for the tranche or drawdown contract.
  The preference maintained here is used to determine if the following loan events are to be held or not in the Intellect Browser:

  Oracle Banking Corporate Lending Action	Oracle Banking Corporate Lending Events	Intellect Action	Remarks
  New loan booking (New Deal) OR PRAM to introduce a new participant	BOOK/INIT	LOAD	Event from LBOL STP
  Reversal/Cancellation	REVC	CANCEL	Event from LBOL STP
  Value dated amendment to increase maturity date/ Principal amount greater than zero	VAMI	AMEND	Event from LBOL STP
  Value dated amendment to decrease maturity date/ Principal amount to zero	VAMI	BRK	Event from LBOL STP
  Rollover	ROLL	ROLL	Event on standalone OL
  Rate Change	RTCH	AMEND	Event from LBOL STP
  Contract amendment	CAMD	AMEND	Event on standalone OL

  Note:

  Events performed on the standalone OL contract are not held in the intellect browser and are fed to intellect without manual intervention.

Specifying the Rounding Details

Rounding Rule

Indicate the currency rounding rule that must be applied to round off interest amounts in the selected currency, for the main interest component. The following options are available in the drop-down list:

• Truncate
• Up
• Down
• Round Near

For more information on Rounding Rule, refer to Specifying the Rounding Details section in Loan Syndication Contracts - Part 2 chapter.