Drawable Bond

Definition

Drawable bonds are bonds that are redeemed by "drawing" certain amounts on certain dates, according to the conditions of the bond.

  • The issuer issues the planned redemption schedules for the whole bond.

  • If the issuer can give notice on the bond, the redemption schedule of the issuer can change over time as a result of this notice option.

  • The buyer of a redemption bond has no control over the redemption payment amounts for the bond. On certain dates, a draw takes place to determine the units or series of units to be redeemed. Because the redemption amounts are only established by chance, the individual payment flows cannot be predicted for the investors, and can only be estimated.

Integration

Business Application Programming Interface (BAPI):

  • To import data from redemption schedules, you can use the BAPI with the Business Object BUS1074 Redemption SchedSet. Choose transaction BAPI to call the BAPI Explorer.

Customizing:

To portray drawable bonds, you need to create the product types Drawable Bond and Installment Bond in Customizing for the Transaction Manager. To do this, choose Start of the navigation path Securities Next navigation step Master Data Next navigation step Product Types Next navigation step Define Product Types End of the navigation path.

You also need to make settings under Start of the navigation path Securities Next navigation step Master Data Next navigation step Specific Class Data Next navigation step Settings for Special Security Types Next navigation step Drawable Bonds Next navigation step Define Classes for Redemption Schedule Sets End of the navigation path and Define Redemption Schedule Sets.

Process: Drawable Bond

Portraying drawable bonds in the system:

Function

Prerequisites

Result/Comments

Create the bond as a class in the system.

The issuer of the bond has already been created as a business partner in the role of Issuer.

Purchase of the bond

The drawable bond is now part of the position.

Update the redemption schedules in the class data on a regular basis

The cash flow for the bond position is always up-to-date since it is based on the current redemption schedule in the active redemption schedule set.

Manage the positions using the functions for Securities Account Management and Accounting.

Once you know the drawn amounts for the publication date, or when the next redemption date is reached, you must transfer the drawn amounts using the function Exercise Security Right.

  • You need to create the position indicator for the redemption bond.

  • You can enter the drawing factor specified by the issuer using the function Edit Drawing Factors.

  • There must not be any valuations for the positions after the key date.

The drawn partial position of the drawable bond is transferred to the corresponding installment bond.

After the publication date, the redemption flow for the corresponding redemption date is no longer displayed in the cash flow for the drawable bond. To keep the cash flow as up-to-date as possible, you need to perform the transfer for the publication date.

You can now use the Manual Debit Position function to post the redemption payment for the drawn partial position.

On the redemption date, all flows for the drawn partial position must have the status Fixed.

The drawn partial position is redeemed.

See also:

Customizing for Drawable Bonds

Class and Create Drawable Bond

Edit Drawing Factors

Redemption Schedule and Redemption Schedule Set

Securities Account Management and Position Indicator

Exercising Rights