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Hi Bhavik,
Here is the information regarding PIK
processing. I think it would be helpful if the intended population of
the PIK segment and reflection of the increase on the loan is reviewed on
the interest payment message. Additionally, it may be helpful to discuss
possible impacts on the rollover message based on the use of that for PIK
processing. Please let me know if you would like additional
information. Thanks, Ann
3.1 Manual
PIK
This PIK has no discernable characteristics. Essentially, the interest is processed as a payment on the accrual, the existing loan is paid down, and a new loan is created that has been increased to encompass the interest payment plus the principal. This may happen very rarely. It may be helpful, if this is an essential part of the business processing and cannot be avoided, that some type of flag be created to make this easily identified for special processing to avoid sending out an interest payment notice and then a drawdown funding request. For example, If the pricing option was designated with "PIK" as the prefix it would allow the message to be flagged in a way that may be acceptable to the recipient and our agency team. It might also be possible to discontinue this as a PIK processing option. 3.2 PIK
done with repricing option
This PIK has discernable
characteristics from the loan repricing table data. If the LRP_IND_SETTLE_NET is set for
this transaction and there is an interest payment, then the increase on the loan
is associated with a PIK.
Regardless of whether the PIK is for the full or partial amount of the
interest due, the LRP_IND_SETTLE_NET is set. This allows for special processing to be
implemented, such as alerting the notice recipient that this is a PIK
transaction, which will result in an increased borrowing under a new loan. Probably 95% or more of PIKs are set up
as a rollover like this. 3.3
Toggle PIK
There is also a PIK feature that allows for a time extension on the accrual due date whereby the interest does not become past due if paid within the agreed time frame when this feature is invoked. However, there is no paydown of the interest due and there is not an increase on the existing loan or other loan. The intent of this feature is to extend the due date without penalty. It is not clear if there is any Loan IQ specific event that would indicate that this has happened, nor is there any stored value that could be used to indicate that this feature has been invoked. Additionally, there is nothing in the FpML message that could be used for publication. 3.4
Loan IQ PIK
processing with new functionality
Loan IQ has created a new module
that allows PIK as a payment option.
This would not require a rollover (such as with item #2). The interest due would simply be paid
down and rolled into the principal on the same loan. It is not clear if it could be rolled
over to a new loan or loans but in all liklihood, there would be considerable
flexibility. Regardless, the
timeline and cost to bring this in and implement would probably not be worth it
unless we could not resolve the PIK processing without it. Since PIK processing must be within
scope for Agency notifications, we have to leave this on the table as a
consideration. Ann Taylor
ü Please consider the environment before printing this email. From: loanwg@xxxxxxxx [mailto:loanwg@xxxxxxxx] On Behalf Of Bhavik Katira Sent: Monday, December 14, 2009 9:17 PM To: loanwg@xxxxxxxx Subject: Loan FpML WG Meeting: 15 December 2009, 1000-1030EST (London Time: 3-3:30pm) Dial-in
Details US: + 1 (888) 481 -
3032 Intl: + 1 (617) 801-
9600 UK: 0800
904-7961 Participant Code:
28413758 Agenda 1.
Review attached
updated schema. a.
Feedback…? 2.
Discuss next
steps a.
Further potential
changes for January.
i.
Pending potential
PIK review. Waiting for documentation outlining potential changes to current
schema (Ann Taylor).
ii.
Rollover changes are
currently not scheduled for implementation (changes relating to relationships
between old and current contracts – Mazhar Iqbal). b.
Business validations
documentation to be created for v5.x. Regards, Bhavik
Katira CEO TenDelta™ Fresh
insight. Pure logic. +1.917.582.4574 new york +44.(0).7780.808732 london TenDelta™
provides business process consulting, technology design & education
services; specializing in the Syndicated Loan Market. Entrusted with engineering
innovative & logical solutions; we endeavor to deliver timely, robust,
cutting-edge solutions. Copyright ©2008-2009. TenDelta™ LLC (US),
TenDelta™ Limited (UK). All Rights Reserved. From: loanwg@xxxxxxxx
[mailto:loanwg@xxxxxxxx] On Behalf Of Bhavik Katira Some further updates based on
business group feedback today and also further design input. This is only a
proposal, please try and review and provide feedback… -
CashFlowPayment(s)
renamed to CashFlow(s). Since these are actually cash flows and not
necessarily payment per say… -
GenericCashFlow.model added. This is now used on
the header section of the FacilityNotice and appears on all notices. The
business group stated that although netting occurs, it does not happen all the
time, so having a standard cash flow section on all notices makes sense. The
GenericCashFlow.model contains a flag and an optional set of cash flows. The
flag is supposed to denote whether there will be an explicit payment associated
with the notice or whether there will be a separate payments (based on a cash
flow notice which will be sent separately). -
I am unsure whether
we should make the cash flow section optional on the facility notice header i.e.
it will only get populated when there is a payment associated with the
notice…? -
CashFlowNotice
renamed to NetCashFlowNotice. This makes sense since it will be used to
designated net cash flows only (if we keep the cash flow as part of the standard
notices). The fpml-loan.xsd has also been
re-organized into separate sections like abstract types, notices, loan
instruments and re-usable concrete types. Eaqch section is ordered
alphabetically (by name of the object). Please let me know if this makes sense
or if you have any other ideas about making the overall schema easier to
navigate. Regards, Bhavik
Katira CEO TenDelta™ Fresh
insight. Pure logic. +1.917.582.4574 new york +44.(0).7780.808732 london TenDelta™
provides business process consulting, technology design & education
services; specializing in the Syndicated Loan Market. Entrusted with engineering
innovative & logical solutions; we endeavor to deliver timely, robust,
cutting-edge solutions. Copyright ©2008-2009. TenDelta™ LLC (US),
TenDelta™ Limited (UK). All Rights Reserved. From: loanwg@xxxxxxxx
[mailto:loanwg@xxxxxxxx] On Behalf Of Bhavik Katira Minutes &
Update All changes reviewed and agreed.
See attached schemas for further updates. Additional design
changes: -
Rate set notice
(Drawdown Notice), the drawdown payment structure has been made optional. This
will allow the rate set notice to be used on a stand-alone basis (e.g. multiple
re-pricings on a related to a rollover). -
Cash flow
notice o
Business events
section introduced. Expanded with a business event type – do we agree this would
be useful…? Combination of business event id and message id assures that we are
referring to the correct version of the underlying
message/event. o
Cash flow payments
section introduced. Multiple cash flow sections allow for multi-direction
payments to occur. Is this necessary…? -
PIK documentation to
be provided by Ann Taylor -
Discussion about
whether we should have a more explicit relationship between old and new loan
contract during a rollover. We currently do not. Agreed that maybe we should
have this discussion with the business group but for now we are keeping the
design as is (decoupled loan contracts during rollover). With respect to release timings,
the FpML organization is currently working on 4.7 and 5.0 in parallel. As a
result of the amount of changes we have made during the last design iteration
(some of which are backwardly incompatible), it seems prudent for us to release
in the 5.x series. 5.0 is currently at the 4th working draft stage
(as of mid-December) and may move to Last Call Working Draft by
mid-Jan. The Loan Working Group decided
that we will review where we are by mid-Jan, if we are not ready then there will
be NO LOAN schema included in 5.0. It is important for us to ensure that the
code released in the 5.x series is properly tested and reviewed and will not
require further incompatible updates/changes as we progress through the 5.x
versions. For 5.0, we will be looking at a
Q1 recommendation and 5.1 will be a Q2 recommendation. Regards, Bhavik
Katira CEO TenDelta™ Fresh
insight. Pure logic. +1.917.582.4574 new york +44.(0).7780.808732 london TenDelta™
provides business process consulting, technology design & education
services; specializing in the Syndicated Loan Market. Entrusted with engineering
innovative & logical solutions; we endeavor to deliver timely, robust,
cutting-edge solutions. Copyright ©2008-2009. TenDelta™ LLC (US),
TenDelta™ Limited (UK). All Rights Reserved. From: loanwg@xxxxxxxx
[mailto:loanwg@xxxxxxxx] On Behalf Of Bhavik Katira Dial-in
Details US: + 1 (888) 481 -
3032 Intl: + 1 (617) 801-
9600 UK: 0800
904-7961 Participant Code:
28413758 New schema
attached. Agenda 1.
AmountAdjustment
introduced. a.
Used in the
currentContracts section of the Rollover Notice. b.
Used in the
Commitment Adjustment Notice. c.
Used in L/C Balance
Change Notice. Removed Prior Amount to be consistent with other
notices. 2.
Created a new
MarginRateChangeTypeEnum. Introduced into the MarginRateChange Notice to define
whether the margin rate change is associated with the Cash or PIK
margin. 3.
Rate Set Notice with
respect to Rollovers. If we make the drawdownPayment section optional then it
only leaves the actual event types as a required field on the entire notice.
Discuss design options… 4.
Combination messages
in a single structure. It is essential that any combinational messages are
designed for the purposes of when the resulting message is a valid business
scenario rather than for ‘volume’ reasons – discuss. E.g. If there are 10
interest payments then what is the value associated with combining the messages
in a single ‘structure’ (if the header is not too
‘heavy’)…? 5.
Cash flow message
types. Initial design idea presented containing a standalone message which
contains references to other business events. Let’s discuss this potential
design. a.
Should we capture
the individual business event amounts, together with the overall ‘net’ payment
amount…? b.
Should there be
multiple payments in multiple directions…? Party A pays X to Party B and Party B
pays Y amount to Party A. c.
Should there be
other parties involved in the payment/cash flow itself…? We also need to discuss the next
steps with respect to release timings. The FpML group is working towards 4.7 and
simultaneously a 5.0 release. We are at a stage where we have made many changes
to many notices (some of which are backwardly incompatible). It seems this would
be a good point for us to move across to a 5.x release. Regards, Bhavik
Katira CEO TenDelta™ Fresh
insight. Pure logic. +1.917.582.4574 new york +44.(0).7780.808732 london TenDelta™
provides business process consulting, technology design & education
services; specializing in the Syndicated Loan Market. Entrusted with engineering
innovative & logical solutions; we endeavor to deliver timely, robust,
cutting-edge solutions. Copyright ©2008-2009. TenDelta™ LLC (US),
TenDelta™ Limited (UK). All Rights Reserved. ============================================================================== |