Early Redemption of a Zero Coupon Bond

Frequently, bond issues are redeemed early to take advantage of economic conditions. That redemption can come from a Call Option or for a variety of other reasons.

To create a Bond Modification (BONDM) transaction in order to mark the bond issue as redeemed, perform these steps:

1. Navigate to the Bond Registry (BOND) and search for the Zero Coupon Bond. When found, take the Modify action on the page and complete the Create Transaction screen.

2. Navigate to the Schedule tab and update the existing record as follows:

• Selected Schedule: false.

3. Copy that record to create a new one as follows:

• Selected Schedule: False

• Schedule Type: Other

4. Navigate to the  Schedule Details tab, insert 1 row as follows:

• Schedule Date: (date of redemption)

• Schedule Detail Type: Refunding Payment

• Principal: (amount of unpaid principal)

• Interest: (amount of interest due at time of refunding)

5. Insert another Schedule Detail record as follows:

• Schedule Date: (next June 30th)

• Schedule Details Type: Amortization

• Other Amount 1: (amount of unamortized discount)

6. Validate the transaction.

7. If errors exist, fix the errors and repeat Step 6. If no errors exist, continue with Step 8.

8. Submit the transaction.