Bonds Corporate Actions
Interest payments are based on the nominal value of a Financial Instrument (FI) / security. Within the electronic
Strate Bonds System one interest rate for each interest Payment Date
is stored for each security. The CSD is responsible for maintaining this information.
On interest Payment Date the system calculates the interest payable per depository account. Interest is calculated
on the Participant’s securities balance as at LDR (last day to register) for the security.
The Issuer and Transfer Secretary are responsible for reconciling interest payments on LDR for securities holdings
bearing interest on LDR. Interest payment amounts are credited to the depository’s account on interest due date
(Payment Date). The depository in turn will credit the various Participants’ funds accounts with the interest
payment amounts. Participants are responsible for paying the interest payment monies to the relevant securities
holders in their books.
The interest calculated for a security may be based on several types of coupon rates namely:
coupon rate does
life of the
||Variable Coupon Rates. Quarterly on the day after interest date, the coupon rate will be changed
according to a formula declared when the security was issued. The new coupon rate is declared by the Issuer.
||Zero Coupon Rates. This security is sold at discounted rates and no interest is paid during the life of
Securities redemptions are processed on redemption date as allocated in the Strate Bonds System. The percentage
recorded on the security for the redemption date is paid to the relevant securities holders.
The Issuer and Transfer Secretary are responsible for reconciling redemption payments on LDR for the total holding
of securities that are redeemed.
Redemption payment amounts are credited to the depository’s account on Payment Date. The depository in turn will
credit the various Participants’ funds accounts with the redemption payment amounts. Participants are responsible
for paying the redemption monies to the relevant securities holders.
The redemption of a security may be governed by different criteria. The redemption type indicates these, which is
one of the following:
||Fixed Redemption date, which falls on an interest date, 100% of the nominal value will be redeemed on
the redemption date. Interest will be paid on the redemption date.
||Fixed Redemption date, which does not fall on an interest date, 100% of the nominal value will be
redeemed on the redemption date. Pro rata interest may or may not be paid on the redemption date.
||Variable Redemption - Holder on interest date, 100% of the nominal will be redeemed on the final
redemption date. The holders of the security may opt to redeem their holdings on one of several redemption dates,
which are declared when the security is issued.
Notice must be given to the Issuers, by the holders of the security, of their intent to redeem. The required notice
period is declared when the security is issued.If the holders of the security wish to exercise this option on redemption dates prior to final redemption, the
Participant, on behalf of the holder of the security, will withdraw their holdings from the depository and the
redemption will be conducted outside the CSD system. Interest will be paid on the redemption date
||Variable Redemption – holder not on interest date, as above, but pro rata interest may or may not be
paid on the redemption date.
Capital repayments are performed on amortised securities that are in a dematerialised or immobilised form in the
CSD. Amortised securities have no fixed time schedule of capital repayments. This is dependant on the capital
amount repaid on the underlying assets and the Issuer is only in a position to confirm the capital repayment
amounts, if any, closer to the interest repayment dates.
It is quite possible that the first few interest payments will be paid without any capital being repaid at the same
time. Although most interest rates linked to these securities are variable, the interest rate is known in advance.
Repayment of securities can be done on a quarterly, half-yearly or yearly basis. During Books Closed Period (BCP):
- for immobilised securities the Issuer notifies the CSD of the capital repayment and the CSD in turn,
calculates the repayment per Participant account and the Issuer’s amount will be reduced when books re-open.
- for dematerialised securities, the Strate Bonds System will reduce the individual Participants
securities balances by the payment amount and reduce the Issuer’s account by the total equivalent amount on Payment