Mandatory Call Corporate Action Example

The SMF setup used for this example follows.
Long Term Debt Coupon Periods

• • Coupon 5.000000
  • Coupon Type Code Fixed Rate
  • Day Count Basis 30/360
  • Payment Frequency Semiannual
  • Payment Frequency Code 6_M

Long Term Debt Dates

• • Issue Price 100.00000000
  • Issue Date 20020101
  • Dated Date 20020101
  • First Coupon Date 20020701
  • Last Coupon Date 20060701
  • Maturity Date 20070701
  • Maturity Price 100.00

The following figure shows this example of a mandatory Call corporate action.

Figure 55: Create Calls/Puts/Refunds Panel
When the system processes the Call, Eagle Accounting creates a close or disposition for the entire position, for every holder of the security in Eagle Accounting, at a Price of 102 USD. Back-dated trades of this security cause the corporate action process to be invoked; Eagle Accounting automatically fires off earnings, and then trues up earnings up to the ex-date of the Call/Put/Pre-Refund.
If you run the corporate action and the date before, you had Par of 1,000,000.00 and an Amortized Cost of 1,025,000.00, and the Redemption Gain Loss Indicator option on the accounting basis is set to:

• Gain/Loss, Eagle Accounting treats the 5,000 loss caused by the Call transaction as an actual loss.
• Amortize, Eagle Accounting treats the 5,000 loss caused by the Call transaction as Accelerated Amortization, and it appears as close amortization on the Cost object.