You can use this pushbutton to enter a time sequence for paying capitalized interest. You should ensure, however, that the payment dates always coincide with the interest capitalization dates. Otherwise, this will affect the nominal capital, as accrued interest will be paid that has not been capitalized. When you save your entries, the data is checked by the system. A warning message appears if inconsistencies are found.

Start date: 01.01.2001

End date: 01.01.2003

Nominal amount: EUR 100 million

Variable Interest Calculation: every 6 months using 6-M-EURIBOR+ 0.5%. The spread must be capitalized too.

Fixed interest Calculation: 4% (payable annually)

The interest calculation on the variable side of a swap takes place every 6 months, whereas interest is only calculated for the fixed side once per year. If the actual payment of interest is orientated on the calculation periods, this would result in greater fulfillment risk for the payer of the variable interest rates. For this reason, the variable interest is also paid annually, and the accrued interest is capitalized.

Interest fixing 6-M-Euribor

01.01.2001: 4,5%

01.07.2001: 5%

01.01.2002: 3,5%

01.07. 2002: 4,5%

Cash flow for the variable side (interest calculation method = 360/360. Assumption: 6 months = 180 days)

07.01.2001: Interest capitalization: EUR 2,500,000 (= 100m * 0.05 * 180/360)

01.01.2002: Interest capitalization: EUR 2,818,750 (= 102,500,000 * 0.055 * 180/360)

01.01.2002: Capitalized interest payment: EUR 5,318,750

07.01.2002: Interest capitalization: EUR 2,000,000 (= 100m * 0.04 * 180/360)

01.01.2003: Interest capitalization: EUR 2,550,000 (= 102m * 0.05 * 180/360)

01.01.2003: Capitalized interest payment: EUR 4,550,000