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Coupon payment

With the Coupon payment corporate action, the system automatically calculates a coupon related to a chosen security, and by running the coupon payment corporate action to the portfolios you can pay the coupon to multiple portfolios at once.

Define coupon information

In order for the coupon payment corporate action to work correctly, some information has to be defined for the security the coupon is calculated and paid for. Before creating the coupon payment corporate action, make sure that the security the coupon is payed for has the following bond information defined in the Extra info tab on the Security window:

  • Define Issue date and Maturity date. This information is shown in the corporate action if defined for the security.

  • Set the calendar and frequency. For fixed rate bonds, also define the first fixing date and fixing (i.e. the fixed annual coupon rate). For floating rate bonds, define the fixings individually at the bottom of the window (set the date from which the defined coupon rate is valid from, e.g. 1.1.2014 and 5,00 % would indicate that the coupon rate is 5,00 % from the beginning of 2014 onward).

  • Define other relevant bond information.

Create coupon payment corporate action

After the coupon information is recorded for the security (bond) the coupon is paid for, the coupon payment can be recorded as a corporate action. Define the following information to the corporate action (a red star indicates a mandatory field).

Action type

The type of the corporate action (Coupon payment).

Security*

Security the coupon is payed for.

After the security the coupon is paid for is chosen, the rest of the fields will be filled in automatically, if the coupon information described above was recorded to the security information of the bond chosen.

Interest rate*

The coupon rate the coupon is calculated with. The coupon rate is calculated automatically from the coupon information saved for the security, based on the coupon calendar and the coupon rate and either the coupon frequency and first coupon date defined for fixed rate bonds or the individual coupons defined for floating rate notes. For example, for semi-annual coupon payments the coupon rate used for calculating the semi-annual coupon payment differs from the annual coupon rate defined for the security. The interest rate will become the unit price of the coupon payment transaction. The pre-calculated rate can also be modified manually.

Next coupon date*

The coupon date. The coupon date is automatically chosen to be the nearest coupon date based on the coupon frequency defined for the chosen security, or the previous coupon date based on the coupon frequency defined for the chosen security: for fixed rate bonds, the coupon date is set based on the coupon frequency and the first coupon date, and for floating rate bonds based on the coupon frequency and the date of the first individual coupon defined (until FA 3.0). The coupon date will become the transaction date of the coupon payment transaction. The pre-defined date can also be modified manually.

Payment date*

The payment date of the coupon, e.g. when the coupon is actually paid.

Transaction type*

The transaction type for the transactions created to the portfolios from the coupon payment corporate action.

The rest of the information in the window summarizes the bond information defined for the security the coupon payment is created for. This information is shown as background information for the calculation of the coupon payment. If there is no information visible, make sure your have defined them for the security you are paying the coupon to

  • First coupon date - the first coupon date defined in security's Bond info.

  • Issue date - the issue date of the bond defined in security's Basic info.

  • Maturity date - the maturity date of the bond defined in security's Basic info.

  • Accrual calendar - the coupon calendar of the bond defined in security's Bond info.

  • Coupon frequency - the coupon frequency of the bond defined in security's Bond info.

  • Coupon rate (annual) - the annual coupon rate of the bond defined in security's Bond info.

A new corporate action is created with the OK button below the corporate action information.

Run the coupon payment to selected portfolios

A created corporate action does not affect any portfolios by itself, but the corporate action has to be run to the affected portfolios in order to create the coupon payment transactions.

  • Choose the portfolio / portfolios you want to run the coupon payment to. By choosing all portfolios or a group of portfolios in the run, the coupon payment transaction will be calculated to all portfolios containing the security of the coupon payment.

  • Define the tax rate and tax type to be used in the transactions created (you can also define default tax rates in Preferences - Default tax rates to be used automatically).

  • Click Run & close to get a preview of the transactions to be created as a result of the run. Click Accept and run to create the shown transactions to the portfolios. Alternatively, you can schedule the corporate action to be run by the system on a later date by defining a date and time and clicking the Schedule & run button.