Understand Variable Rates for a Security

If a security has a floating rate, variable rate, step rate, or an unscheduled variable rate coupon type, you must establish a coupon rate in the Variable Rate table to recognize accruals and amortization, and calculate an amortization and trade yield. If a security has one of the coupon types mentioned above, and no variable rate is in the Variable Rate table, the system generates an error when you invoke the earnings process. For these securities, the system uses the coupon field on the security master record for reference purposes only.

Variable rate information is source specific, so you can store rates for multiple sources. The source on the security has to match the variable rate source on the entity in order for the system to use it in fixed income processing. For OID (original issue discount) eligible bonds that have a floating, variable rate, step coupon, or an unscheduled variable rate coupon type, the system requires a coupon rate as of the issue date to calculate an adjusted issue price. For more information, see Understand Original Issue Discount (OID).