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Overview

Enhanced Income Securities (EISs) are hybrids with both common stock and bond components. They are exchange-traded and make periodic distributions consisting of dividends and interest. After a specified period, the underlying components can be separated and traded individually. This document is intended to provide a brief overview of current Eagle functionality that can be used to support EIS.

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Parent Security

Initially the EIS acts similar to common stock, and should be set up as such in Eagle Accounting. Use a Processing Security Type (3931) of EQCSCS (Common stock). It should be priced daily and dividends (distributions) can be generated using the corporate actions panels.

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Underlying Security

When the holder elects to split an EIS and trade its underlying pieces, the original position must be closed and new positions opened manually. A sell should be booked for the EIS, with buys booked for the underlying equity and fixed income securities.

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The underlying fixed income has unique terms that require manual intervention. Calculations are outlined in the accompanying spreadsheet.

• Adjust interest rate: the user you must supply Eagle Accounting with an interest rate = actual interest rate * minimum increment; face
  • Face value will remain intact and accruals will be calculated correctly
  • If the minimum increment changes over the fixed income’s income security’s life, a Coupon Type of  (97) of V (Unscheduled Variable Rate) can be selected use to support different rates
• Set Price Multiplier (18) = 1.00

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Notes

Yield calculations may not be meaningful due to adjustment of interest rate.