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A Bond Forward can have two different methods upon final settlement: cash settlement or physical delivery.

Cash Settlement

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Settle the position

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by entering a close

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at the prevailing market price

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. The resulting cash settlement will be equal to the gain/loss.

Physical Delivery

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Settle the position by entering a close for the Bond Forward and an open for the underlying bond. The prices for these transactions depend on how you want to recognize the premium's URGL.

• Move Premium to Underlying
  • Enter a close at cost (same price as the open) 
    • This will prevent prevents any cash from being generated
  • Buy the underlying bond, again using the same price at which the Bond Forward was originally booked
    • This will immediately factor the premium into the bond's URGL
• Recognize Premium on Bond Forward
  • Enter a close at the prevailing market price
    • This moves the URGL to realized and generates cash
  • Buy the underlying bond at the prevailing market price
    • This will prevent the premium from being factored into the bond's URGL

Accounting

Once a bond trade is booked it will be picked up in Eagle’s global workflow. Daily accruals and periodic resets are generated as part of the earnings process, accounting valuation is calculated when posting unrealized gain/loss, and Data Management valuation is calculated in the STAR to PACE push. These can also be triggered manually via Global Process Center:

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