1. Cash Flow Engine Reference Guide
  2. Cash Flow Dictionary
  3. Cash Flow Columns
  4. Interest Type Code (INT_TYPE)
  5. Module Usage

8.2.64.2 Module Usage

Oracle ALM and Funds Transfer Pricing Cash Flow Methodologies reference INT_TYPE in determining whether interest payments are made in arrears or in advance. INT_TYPE impacts the calculation of interest income (financial element 430, 435).

  1. If INT_TYPE = 1, the record is considered an interest in arrears. Interest payments are paid at the end of the payment period along with the principal payments.
  2. If INT_TYPE = 2, the record is considered interest in advance. Interest payments are paid at the beginning of the payment period starting from the ORIGINATION_DATE. Payments are made on every payment date except for the MATURITY_DATE.
  3. 3. If INT_TYPE = 3, the record is considered as rate set in arrears, and the interest is also paid in arrears. This is a unique case where both the rate is set in arrears and the interest is paid in arrears. This setting will typically be used only for modeling Set in Arrears SWAPS.
  4. The calculation used to determine interest income (financial element 430) for an interest in an advance record depends also on the ACCRUAL_BASIS_CD. Following are the relevant equations for an interest in the advance calculation: For ACCRUAL_BASIS_CD 30/360, 30/365 and, 30/Actual the interest income calculation, when PMT_FREQ_MULT = M (assuming no compounding), is: Current Period's Ending Balance * Cur Net Rate/100 * PMT_FREQ [number of months] * [accrual basis] * (Following Payment Date - Next Payment Date)/(Calculated Following Payment Date -Next Payment Date) where: Following Payment, Date is the payment after the Next Payment Date. Calculated Following Payment Date is the Next Payment Date rolled forward by the number of months in PMT_FREQ. In most cases (a) would be the same as (b); however, if there is a short or extended maturity, (a) <> (b), and therefore the last interest cash flow (in other words, the payment just before maturity) would need to consider this factor. The Following Payment Date is the payment that follows the one currently being calculated. For ACCRUAL_BASIS_CD Actual/365, Actual/Actual, Actual/360 (the example is for an Actual/365 record), the interest income calculation is: Current Period's Ending Balance * Cur Net Rate/100 * (Following Payment Date -Current Payment Date)/365.
  5. Even though the Cash Flow Engine pays interest in advance on every payment date except for the MATURITY_DATE, the REMAIN_NO_PMTS_C field should count MATURITY_DATE as a payment date because the principal is still paid on this date.
  6. For multiple reprice events within a payment event, interest in advance is not supported. Instead, interest is calculated using interest in arrears concept. An error message is logged when multiple reprice data has Interested in advance “Interest in Advance is not supported for multiple reprice events. Therefore. defaulted to Interest in Arrears”.