Overview

Enhanced Income Securities (EISs) are hybrids with both common stock and bond components. They are exchange-traded and make periodic distributions consisting of dividends and interest. After a specified period, the underlying components can be separated and traded individually. This document is intended to provide a brief overview of current Eagle functionality that can be used to support EIS.

Parent Security

Initially the EIS acts similar to common stock, and should be set up as such in Eagle Accounting. Use a Processing Security Type (3931) of EQCSCS (Common stock). It should be priced daily and dividends (distributions) can be generated using the corporate actions panels.

Underlying Security

When the holder elects to split an EIS and trade its underlying pieces, the original position must be closed and new positions opened manually. A sell should be booked for the EIS, with buys booked for the underlying equity and fixed income securities.

Equity

The underlying equity is exchange-traded and should not require any special setup.

Fixed Income

The underlying fixed income has unique terms that require manual intervention. Calculations are outlined in the accompanying spreadsheet.

• Adjust interest rate: you must supply Eagle Accounting with an interest rate = actual interest rate * minimum increment

  • Face value will remain intact and accruals will be calculated correctly

  • If the minimum increment changes over the fixed income security’s life, a Coupon Type (97) of V (Unscheduled Variable Rate) can be use to support different rates

• Set Price Multiplier (18) = 1.00

Notes

Yield calculations may not be meaningful due to adjustment of interest rate.