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What should be product type category if debt issue cost and debt discount are to be amortised in same transaction?

Former Member
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Hi,

We have several debt transactions where both debt issue cost and debt discount exist for the same transaction. We are trying to configure SAP to amortise these debt issue cost and debt discount flows for us. We tried with product type category 550 (interest rate instrument) but it only permits either discount or premium but not both for the same transaction. We are hoping if someone can help us identify any such product type category which can suffice our requirement of amortising both flows within the same transaction.

Your help would be greatly appreciated.

Regards,

Sweta

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Answers (1)

Answers (1)

former_member566828
Active Contributor
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Hi Sweta,

could you please elaborate on the structure of this debt instrument:

- interest-wise: does it pays interests/ coupon or is it zero-coupon bond?

- is it like bullet loan with one-time capital increase/ decrease and final repayment at the maturity or partial repayments during life-cycle;

- is it once at a time instrument or you might be involved in number of purchases/ sales or issues of this instrument.

Kind regards,

Renatas

Former Member
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Hi Renatas,

It is a debt transaction which pays interest monthly , sometimes capital increases or decreases, has partial repayments and has a final repayment. It also has debt issue cost and debt discount which need amortisation. It is like a time instrument i.e. one debt created and accounted till end and no purchase / sale is involved. We are trying to use amortisation procedure for this activity.

Regards,

Sweta

former_member566828
Active Contributor
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Hi Sweta,

from what you describe I would use the Interest rate instrument (the Product category 550) and then assign an appropriate Position management procedure of category 'Securities/ Loans/ Money Market/ Listed Options Normal style (without index-linked bonds)', consisting of at least Amortization and FX valuation steps - as certain flexibility is available in all these elements, please test if these settings give you expected results and adjust if required.

hope this will help you.

Kind regards,

Renatas

Former Member
0 Kudos


Hi Renatas,

We did configure that but 550 does not give me an option to include both premium and discount in one transaction. It is either of the two which can be amortized hence I am stuck.

Regards,

Sweta