Dear Treasury Friends,
We have a variable interest rate drawable bond issue (product category 42/product type 42N) for $75M. The full life of the bond is 29.5 years and the first installment repayment ($1.5M) is due 3.5 years after issuance with various repayment amounts occurring annually from then on. We are using reference interest rates. The interest rate can change every days and is typically due once a month: interest calculation method is Act/ActY (ISDA) term of 7 and unit of time 1 day. Interest payments up to the date of the first installment repayment are correct, the one item that is not yet working correctly is the accrued interest related to the installment repayment. At the installment repayment date, accrued interest for just the installment repayment amount is due with the payment: i.e. interest is due on 8/15/20XX for a total of 12 days on $1.5M at a rate of 0.01%. The remainder of the interest for that month is due on the first working day of the new month: i.e. interest is due on 9/1/20XX for a total of 29 days on $73.5M at a rate of 0.01%. What is the configuration need to have only the interest related to the installment repayment amount pay with the installment repayment on 8/15/20XX and the remainder on 9/1/20XX?
Thank you in advance for your assistance in this matter.
Lisa