Drawable Bonds 

Use

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

·        The issuer publishes 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 individual 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 individual investors, and can only be estimated.

To account for this, the system gives you the option of defining different redemption schedules and redemption schedule sets in the class master data for the drawable bond.

See also:

Editing Redemption Schedule Sets and Redemption Schedules

Prerequisites

In order to map drawable bonds in the system, you must define product types for drawable bonds and installment bonds in Customizing for the securities area. You also need to define classes and names for the redemption schedule sets.

See also: Customizing for Drawable Bonds

Compare your settings with the model Customizing settings.

Integration

Business Application Programming Interfaces (BAPIs)

·        If you receive the redemption schedule data from a data provider, you can use BAPIs to read the data into the system. The business object BUS1074 RedemptionSchedSet was created for this purpose and the following methods defined for it:

¡        Create redemption schedule sets (Create)

¡        Create redemption schedules for redemption schedule sets (AddSchedule)

¡        Change redemption schedule data (ChangeSchedule)

¡        Read redemption schedules for redemption schedule sets (GetDetail)

¡        Read header data for redemption schedule sets (GetList)

·        The following evaluation reports are available:

¡        List of Redemption Schedules

¡        List of Redemption Schedule Sets

Features

Process: Drawable bond

The following functions are available for performing the individual steps:

Function	Prerequisites	Result / Comments
Create the bond as a class in the system. See also: Creating a Drawable Bond	The issuer of the bond has already been created as a business partner in the role of issuer.
Purchase of the bond See also: Editing a Securities Transaction		The drawable bond is recorded as a balance sheet position.
Update the redemption schedules in the class data on a regular basis.		This keeps the cash flow for the bond position up-to-date. The cash flow 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 the drawn amounts are made known on the publication date, or when the next redemption date is reached, you must transfer the drawn amounts using the function Exercise Security Right. See also: Exercising Security Rights	·        You must perform period end closing for the drawable bond position as at the transfer date. ·        All flows for the bond position must have Fixed status before the transfer date. ·        You must create the position indicator for the installment bond. ·        You can enter the drawing factor specified by the issuer using the function Edit Drawing Factors.	The drawn partial position of the drawable bond is transferred to the corresponding installment bond. When the publication date is reached, the redemption flow for the corresponding redemption date is no longer displayed in the cash flow for the drawable bond. In order to keep the cash flow as up-to-date as possible, you should perform the transfer for the publication date.
You can then use the  Manual Debit Position function to post the redemption payment for the drawn partial position.	You must have performed period-end closing  for the drawn partial position as at the redemption date.	The drawn partial position is redeemed.