Portion of a Collateral Agreement 

Definition

Divisions of collateral agreement value.

 

Use

You can divide the value of a collateral agreement into logical portions and assign them an order in which they can be used. You must maintain ATLEAST one portion for a collateral agreement. Portions of collateral agreement are used for defining the scope of collateralization. Additionally, the portions are used internally in the collateral calculations for distribution of collateral value to receivables.

 

Use in Determining Scope of Collateral Agreement

Assignment to Receivables

A collateral agreement portion is a part of the business logic (semantics) based on which a collateral agreement is assigned to a receivable.

 

In the process of collateralization, you assign portions and not the complete collateral agreements to receivables. You can therefore create logical divisions of value of a collateral agreement for assignments to multiple receivables. You can also create portions to represent ownership shares of business partners involved in the collateral agreement.

 

It is possible to assign multiple receivables to a single portion of a collateral agreement. Certain restrictions have however been defined on assigning collateral agreement portions to receivables. For more information, see

Assigning Receivables to Collateral Agreements

 

Declaration of Purpose

Rules for automatic assignment to receivables can be defined for each collateral agreement portion. Rules are possible only if a collateral agreement has a wide declaration of purpose.

 

Blocking Portions

You can also block a collateral agreement portion for use in collateralization. This is possible by using portion restrictions. You can block a portion, for example, if the value has been assigned for use by a third-party. Or even if the portion value is legally not available for business purposes (for example in scenarios for syndicated collateral agreement, pool agreement or a private land charge assignment). For detailed information, see

Restriction on a Collateral Agreement Portion

 

Use in Distribution of Collateral Value

The collateral value that is calculated internally for a data constellation is first distributed pro-rata to the portions of a collateral agreement using their ranking ratio. Subsequently, the collateral value allocated to a collateral agreement portion is distributed to assigned receivables and their portions.

 

You assign receivables to collateral agreement portions and not to the collateral agreements. You must create at least one default collateral agreement portion. You can create any number of collateral agreement portions. The collateral agreements are an important part of collateral terms for a collateral agreement.

Structure

For each collateral agreement portion, you can maintain the following:

·        Portion ID that you can assign based on the order of the portion in the collateral agreement.

·        Value and currency based on ownership share of the business partner

·        Ranking ratio to determine the sequence of a portion in the collateral agreement that will be used to distribute collateral value

·        Portion restriction to determine how links must be maintained and generated

·        Validity dates for the portion.

The validity dates for the portions must lie within the validity period of the collateral agreement.

·        Business partners and the function in which they are assigned to the collateral agreement portions.

·        Assignment details for the portion

·        Reference collateral agreement ID for the specified collateral agreement portion