Enter a loan or a deposit in TS with the Loan and Deposit wizard. This article goes through the wizard tab by tab, then covers loans with amortisation and loans linked to a credit facility.
Before you start
- For floating interest, the fixing index (an "ibor" rate) must be set up in Market data setup. It can't be left blank, so if no rate shows in the list, set it up there first.
- For automatic floating interest and spread from transfer pricing rules, you need the permissions Read transfer pricing rules and Price Subsidiary Requests.
- For an internal loan with an automatic mirror deal, the mirror must be set up in Mirror rules.
Steps
Start
- Go to Front Office › New deal and choose Loans & Deposits.
- Set the loan type. Choose Loan if the legal entity is borrowing funds. Choose Deposit if it is lending (placing) funds; the cash flows are then the opposite.
- For an amortising loan, choose the amortisation type: Annuity, or Straight (a fixed amount each payment period). The default is No Amortisation. See Loans with amortisation below.
- To link the loan to a credit facility, select it under Credit Facility. You can also link the loan from the credit facility's registration window.
- If the credit facility is in a different currency and you want to convert the drawdown into another currency amount, enter the FX Conversion Rate. See Loans linked to a credit facility below.
Basics
- Fill in the notional (currency and amount) and the dates (deal date, begin date and end date).
Interest
- Fill in the interest details. For floating interest, choose the fixing index. The base interest rate for the first period is filled in automatically, which fixes that period. If the first fixing period is broken (uneven), the base interest rate is interpolated.
- The fixing period and the payment period can be different, if that's what was agreed.
- Select Last day of period to adjust the roll date to the last day of the period. For example, a period ending on 30 March is adjusted to 31 March, following the business day convention (see Date rolling behaviour).
- Choose the day count convention. For details, see Day count conventions.
Choose how dates are adjusted:
- None: neither the maturity date nor the payment date is adjusted.
- Payment Date: only the payment date is adjusted. If the maturity date falls on a Sunday, interest is calculated until Sunday but paid on Monday, or as the business day convention says.
- Maturity And Payment Date: both the interest calculation date (maturity date) and the payment date are adjusted by the business day convention.
Bank accounts
- Bank accounts are set from Default bank accounts. The legal entity's bank accounts are required for both legs; the counterparty's are optional.
Tags
- Tags are optional. For an internal deal, the mirror deal gets the same tags.
Finish
Set the remaining details:
- Bank holiday calendar: add any extra calendars here. By default, the transaction currency's calendar is used.
- Interest form: how TS reads the interest rate you entered. Simple is the default and most common; you can choose Compounded.
- Offset days: can be set separately for interest and amortisation payments.
- For an internal loan, the mirror deal follows the mirror rules. To override the rule, change Mirror creation type from Use rule to No Mirror or Create mirror.
- Select Save.
Result
The loan opens on its Summary tab.
The interest to be paid is on the Transactions tab.
Loans with amortisation
Most loans with amortisation use the linear method, Straight (Normal). Amortisation can start at once or on a later date.
On the Basics tab:
- Residual amount: leave it blank, unless it's a leasing loan with a residual value.
- Amortisation period and First amortisation roll date: in this example, the first amortisation is a year after the start and then every 3 months.
- First amortisation amount: fill it in only if it differs from the ordinary linear amount.
- Amortisation amount: calculated so every amortisation is the same, here 11 111 111,11. To use a different amount, overwrite it.
You can't amortise more than the loan amount. If you try, you get an error message.
With the amortisation amount changed to 5 000 000, the rest is repaid with the last amortisation:
The amortisation types are explained in Amortisation type. To edit or remove an amortisation, see Enter, edit and remove an amortisation or capital increase (Loan, IRS).
Loans linked to a credit facility
For the FX conversion rate on a loan linked to a credit facility, the credit facility's currency is the price currency and the loan's currency is the base currency.
For example, with a credit facility in EUR and a drawdown in SEK, enter the FX conversion rate as a SEK/EUR rate. If the EUR/SEK rate is 11.40, the FX conversion rate is 0,087719298245.
