3.3.4.4 Indicating Propagation of Interest Components to Participant Contracts

Interest component classes for specific application to borrower tranche or drawdown contracts can be propagated to participant contracts resulting from the borrower contracts. You can build this preference into interest classes that you define specifically for borrower tranche or drawdown products. During definition of the class, this preference can be indicated, by selecting the Propagation Reqd check box in the Interest Class Maintenance screen.

Note:

This check box is active only for interest components of the LB module. For all other modules the box is deactivated.

Select the PIK Component check box to indicate that you want to calculate the interest based on the PIK margin.

In the Product Interest Class Maintenance screen, when you are associating the interest components for the borrower tranche or drawdown product, you can choose an interest class for which the propagation to participants option has been indicated in the class definition, if required. If so, the Propagation Reqd check box is selected.

You can change this specification and deselect the Propagation Reqd check box, if you want to indicate that interest class propagation to participants is not applicable. Alternatively, if you have chosen an interest class for which propagation to participants has not been indicated, you can select the Propagation Reqd box to indicate propagation of interest class to participants, if required.