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
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:The following are the accounting entries: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 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.
- Netting takes place only if the following parameters for a cash flow are
same:
- 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
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. - 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 ModeYou 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.
- Part. SSI Pick UpYou 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.
- 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,- Available LC Sublimit = Minimum [(Global Tranche Amount – Global Drawdown Outstanding), Global LC Sublimit]
- Global Drawdown Outstanding = Total Drawdown Outstanding / Global Percentage
- Global LC Sublimit = Borrower LC Sublimit Amount / Global Percentage
- Percentage of deal fronted = (100 – (Global Percentage))
- 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,- Available LC Sublimit = Minimum [(Tranche Transfer Available Amount – Drawdown Outstanding), Global LC Sublimit]
- Percentage of deal fronted = (100 – (Total % of the self-participants in the tranche))
- 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.
- InactiveIf 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:The preference maintained here is used to determine if the following loan events are to be held or not in the Intellect Browser:
- 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
- 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.
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- Truncate
- Up
- Down
- Round Near
Parent topic: Processing a Borrower Tranche Contract