4.23.1 Validating Base Rate Floor and Ceiling at Drawdown Level

Following validations are done for base rate floor and ceiling at drawdown level:

• If the base rate is less than the floor defined at the tranche, then the system displays the following override message:

  Rate is less than the Floor defined at Tranche. Do you want to over-write the rate with the Floor value?

  Clicking on the OK button, the system defaults the base rate with the floor value defined at the tranche.

  If you cancel the override message, then you need to specify the base rate greater than the floor value to exit from the screen.

• If the base rate is greater than the ceiling defined at the tranche, then the system displays the following override message:

  Rate is greater than the Ceiling defined at Tranche. Do you want to over-write the rate with the Ceiling value?

  Clicking the OK button, the system defaults the base rate with the ceiling value defined at the tranche.

  If you cancel the message, then you need to specify the base rate lesser than the ceiling value to exit from the screen.

Example

Assume the following values for an interest component maintained for the Tranche:

• Floor value of Base rate: 6%
• Ceiling value of Base rate: 8%

During Drawdown Rate fixing,

• If the base rate is fixed to 2%, since the rate is less than the Floor defined at the Tranche, system will display the following override message,

  Rate is lesser than the Floor value, 6% defined at Tranche. Do you want to over-write the rate with the Floor value?

  Clicking on the OK button, the system defaults the base rate as 6%. If you cancel the message, then you should input a base rate greater than Floor rate maintained in the Tranche.

• If the base rate is fixed to 10%, since the rate is greater than the Ceiling defined at the Tranche, system displays the following override message:

  Rate is greater than the Ceiling value, 8% defined at Tranche. Do you want to over-write the rate with the Ceiling value?

  Clicking on the OK button, the system defaults the base rate as 8%. If you cancel the message, then you should input a base rate lesser than Ceiling rate maintained in the Tranche.