How Eagle Accounting Creates Coupon Schedules

Eagle Accounting uses the Coupon Date and Payment Frequency fields to create the complete coupon schedule of the bond, from issuance to maturity date.

Create the First Coupon Period

Eagle Accounting calculates the cash flow from the Settlement Date of the trade, to create the expected cash flow for the calculation of amortization yield, trade yield, generation of future cash flows, and for accrual processing. Eagle Accounting uses the period from Dated Date to First Coupon Date to create the first coupon period, because the first coupon period of a security can be a long-length coupon period, a short coupon period, or a normal length coupon period.

• A Long Length Coupon Period is a coupon period that contains more accrual days than would normally occur, based on the payment frequency of the bond.

• A Short Length Coupon Period is a coupon period that contains less accrual days than would normally occur, based on the payment frequency of the bond.

Create the Second to Penultimate Coupon Period

Eagle Accounting then uses the First Coupon Date, Payment Frequency, Interest Payment Timing, Day of Month Override, Business Day convention and Last Coupon Date to create the second to penultimate (penultimate means 2nd to last) coupon period. Last Coupon Date stands for last modal coupon date or last normal coupon date. In most cases the Last Coupon Date field should be sent to the penultimate coupon because the Last Coupon Date can have a short, normal, or long coupon period.

Create the Last Coupon Period

Eagle Accounting then calculates from the Last Coupon Date to Maturity Date to generate the last coupon period, because the last coupon period can have a short, long, or normal coupon period. Note that you can set the Last Coupon Date to the maturity date, if the security has a last modal (normal length) coupon period. However, it is suggested that, as a norm, you set the Last Coupon Date as the penultimate coupon date, to avoid incorrectly setting up the Last Coupon Date. If the Last Coupon Date is not in sync with the values in the Payment Frequency, Interest Payment Timing, Day of Month Override, Business Day Convention, and Last Coupon Date fields, an error occurs in Eagle Accounting when the earnings process is invoked. You see an error message in Automation Center's Exceptions workspace, indicating an invalid Last Coupon Date.

To facilitate entering and validating the Last Coupon Date, Eagle Accounting provides the Calculate/Validate Last Coupon Date field and the Valid Last Normal Coupon Date field. 

About Unscheduled Coupons 

If the security does not have a logical payment frequency, or has a payment frequency that cannot be derived from the Coupon Payment fields, you must set up the security with an Unscheduled Variable Rate security Coupon Type. The Unscheduled Coupon Type field allows you to enter a rate, date, and a cash movement flag in the Variable Rate table. Each time a rate and date is entered in the Variable Rate table with the Cash Movement Flag field set to Yes, Eagle Accounting drops a coupon payment. An example of a security that should be set up with an Unscheduled Variable Rate Coupon Type is a security that changes payment frequency over the life of the bond, or a bond that has a First Coupon Date that is not the normal expected day that the bond pays in the future.