8.9 Interest Rate Revision on a Deal

This topic describes the interest rate revision on a deal.

The type of interest that applies to a deal depends on the definition of the product that it involves. If floating interest rates are applicable for a product, the frequency at which the changing interest rates should be applied on deals involving it will also be defined for the product.

The interest Rate Type of a product is one of the following: fixed, floating, or special. The floating interest rates are defined through the Floating Rate Definition screen. A Rate Code identifies a set of rates defined for a combination of Currency, Amount Limit (optional) and Effective Date. When processing a deal, you link it to the floating rate table by indicating the Rate Code. The rates defined for the Rate Code is applied on the deal (or in other words, the contract).

The rates is applied to a deal depending on whether it has been defined with:

• Auto rate Code Usage - all the rate changes made during the liquidation or accrual period is considered.
• Periodic Rate Code Usage - the rates as of a specific frequency or date is applied.

The Automatic Contract Update does the interest accruals for those deals for which a rate revision becomes due today, whatever the way they have to be applied - every time the rate changes or periodically.

If a fixed interest rate or amount for a deal which has been changed through the Value Dated Changes function falls due today, then the change is effected during BOD processing.