Book Trades for Convertible Bonds

Owned by Nancy Cohn (Deactivated)
Last updated: Jan 11, 2024
2 min read

In the Debt Bond panel, you can manually book an open (buy or short sell) and close (sell or buy to cover) trade for convertible bonds. For detailed instructions on using this panel, see Book Trades for Debt Bonds.

About Additional Fields You Can View

When you book a buy of a convertible bond at a premium, you see the following additional fields on the Open Debt panel.

  • Convertible Indicator (tag 1531). Displays a value of Y if you select a security with its Convertible Indicator set to Y at the security level. Indicates the selected security is a convertible bond. The panel displays this field as part of the security master lookup.

  • Underlying Security Market Price (tag 319). Specifies the price of the underlying security on the trade date of the transaction. This field appears if you select a convertible bond security in the security master lookup fields and that security has a Convertible Indicator set to Y. If you are using the SRPM method, Eagle Accounting use this field along with the Underlying Security to Base FX Rate (tag 9) value to derive the Stated Redemption price at maturity as part of processing the trade. For more information about the SRPM method, see About Calculating Amortization Yield for Convertible Bonds

  • Conversion Premium (tag 5727). Specifies the embedded equity option value. For more information about the EEOV method, see About Calculating Amortization Yield for Convertible Bonds

In prior versions, the Conversion Premium stored the difference between the market value of one share of the bond, and the market value of the shares that would be held if the bond were converted. (Stated Redemption Price at Maturity (SRPM) minus Purchase Price = Conversion Premium).

About Calculating the SRPM

In prior releases of Eagle Accounting, the Open Debt panel calculated, displayed, and allowed the edit of the SRPM value in the Price at Maturity field (tag 42) In this release, the system no longer calculates the SRPM and displays it on the debt panel. The SRPM is calculated behind the scenes as part of processing the trade and electing to use the SRPM method in the amortization method.

A description of these calculated values follows.

  • Underlying Security to Base FX Rate (tag 9). The system retrieves this value as part of the processing. The Underlying Security to Base FX Rate is returned from the FX Rate table (based on the FX Source on the Primary Accounting basis) and is used in the calculation to derive the SRPM when the underlying security Asset Currency does not match the Asset Currency of the convertible bond. This field is retrieved in the establishing of the tax lot.

  • Stated Redemption Price at Maturity (tag 42). The market value of a unit of the bond. If you purchase a convertible bond at a premium and the transaction uses the Stated Redemption Price at Maturity (SRPM) convertible option price method, Eagle Accounting calculates the SRPM (that is, the market value of a share if converted to the underlying security) as part of the processing transaction. Eagle Accounting uses the Stated Redemption Price at Maturity (SRPM) as the target maturity price in the calculation of yield and amortization.

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