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DM: Estimated Interest Accrual Not Calculated Correctly For Debt Deals (Doc ID 2295386.1)

Last updated on SEPTEMBER 01, 2020

Applies to:

PeopleSoft Enterprise FIN Deal Management - Version 9.2 and later
Information in this document applies to any platform.

Symptoms

 

ISSUE:

 

 Estimated Interest Accrual not calculated correctly for Debt Deals

 

STEPS:

 

1. Create a new INSTRUMENT TYPE of Debt

  Day count basis - 30/360

  Discount/Premium- Straightline Method

  Interest Frequency - Semi-Annual

  Business Day Convention - Following

  Interest Calculation - Interest Bearing

2. Create a Deal with the above Instrument Type

  Enter Transaction Date as -5/16/2017

  Enter Settlement Date as -5/16/2017

  Enter Maturity Date as -04/01/2026

  Change Coupon Start Date to 4/1/2017

  Enter Rate as -3.50

  Enter PAR Amount -$220,000,000

  Enter Settlement Amount -$225,820,100.00 & Price % of PAR 102.2080

  Purchased Interest of -962,500.00 automatically populated.

  Enter Counterparty-USBNK

  Click SAVE.

3. Clicked Cash Flows. Amount is correct.

4. Navigate to Estimated Interest Accruals.

  Accrued interest by day is not correct. See calculation below:

  PAR Amount of $220,000,000 multiplied by Rate of 3.5% multiplied by 1 day divided by Day Count Basis of 360 = $21,388.89



Changes

 

Cause

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In this Document
Symptoms
 ISSUE:
  
  Estimated Interest Accrual not calculated correctly for Debt Deals
  
 STEPS:
  
 1. Create a new INSTRUMENT TYPE of Debt
   Day count basis - 30/360
   Discount/Premium- Straightline Method
   Interest Frequency - Semi-Annual
   Business Day Convention - Following
   Interest Calculation - Interest Bearing
 2. Create a Deal with the above Instrument Type
   Enter Transaction Date as -5/16/2017
   Enter Settlement Date as -5/16/2017
   Enter Maturity Date as -04/01/2026
   Change Coupon Start Date to 4/1/2017
   Enter Rate as -3.50
   Enter PAR Amount -$220,000,000
   Enter Settlement Amount -$225,820,100.00 & Price % of PAR 102.2080
   Purchased Interest of -962,500.00 automatically populated.
   Enter Counterparty-USBNK
   Click SAVE.
 3. Clicked Cash Flows. Amount is correct.
 4. Navigate to Estimated Interest Accruals.
   Accrued interest by day is not correct. See calculation below:
   PAR Amount of $220,000,000 multiplied by Rate of 3.5% multiplied by 1 day divided by Day Count Basis of 360 = $21,388.89
Changes
Cause
Solution
References


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