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.

Please note this task could start from the Document Catalog much like the "Schedule Change for Variable Rate Bond" task, but only the origination from the Bond Registry will be given here.

For screen shots and field information for the Debt Document in this common business task (BONDM), refer to the "Debt Setup & Modification Document Layout and Fields" section in this same user guide.

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

Navigate to the Bond Registry (BOND) and search for the Zero Coupon Bond. When found, take the Modify action from the page, and complete the Create Document screen.
Complete the Header section with any necessary information (there may not be the need for any).
1. No particular Header field is mandatory nor is any required for this task. However, Document Name or Document Description can be conditionally required with Document Control (DCTRL).
2. If the current Application Date should not be used, then manually enter a date in the Record Date field.
Navigate to the Schedule section where a row will already be inserted with your information.
Complete the General Information tab.
1. Uncheck the Selected Schedule flag on the existing record.
2. Copy that record with the Copy Line icon and insert a new record with the Insert Copied Line action and any necessary descriptive information about the new Schedule.
3. Check the Selected Schedule flag on the new record and see that the Historical Schedule flag is checked automatically by the document on the old Schedule.
4. Enter any necessary descriptive information on the new record.

Navigate to the Schedule Details section
1. Insert one record with the Redemption Date as the Scheduled Date.
2. Enter Schedule Detail Type of Refunding Payment.
3. Enter the amount of principal not yet paid in the Principal field.
4. Enter the amount of interest due from the last payment to the Redemption Date in the Interest field.
5. Insert a second record with the Redemption Date or other date of your choice as the Scheduled Date.
6. Enter Schedule Detail Type of Amortization.
7. Enter the amount of Original Issue Discount not yet amortized as Other Amount 1.
8. Enter the amount of Issue Costs not yet amortized in Other Amount 3.
Click the Validate button to validate for errors.
If errors exist, fix the errors and repeat Step 6. If no errors exist, continue with Step 8.
Click the Submit button to submit the document.