Early Repayment Options
Debt instruments could have early repayment options to repay the principal to investors (partially or totally) before maturity or to reduce the maturity date.
Debt instrument with defined maturity date may terminate earlier if the full principal redemption happens earlier than maturity.
If the debt instrument has early repayment options, the D-ASA MUST implement
the OPTIONAL set_early_repayment_option method.
Early Repayment Schedule
If the D-ASA has early repayment options, it MUST define early repayment time
events as uint64[] array, where:
-
The length of the array MUST be
N>=1; -
The first element MUST be the early repayment start date \([OPANX]\) (
uint64): the time after which early repayment options could be executed; -
If the D-ASA has a maturity date, the last element MUST be the early repayment end date \([OPXED]\) (
uint64): the time after which early repayment options cannot be executed.
The early repayment time events MUST be sorted in strictly ascending order.
The early repayment start date MUST NOT be earlier than the issuance date.
The early repayment end date MUST NOT be later than the maturity date.
The unscheduled prepayment events \([PP]\) MUST occur within the defined early repayment schedule.
In the case of non-continuous day-count conventions (ID<255, see Day-Count
Conventions section), the time periods between subsequent
events MUST be multiples of a day, in seconds (86400).
The early repayment time events MUST be set with the set_early_repayment_time_events
method.
The early repayment time events MAY be updated with the set_early_repayment_time_events
method.
The updated early repayment time events MUST NOT modify past events.
Prepayment Effects
An early repayment option could have different prepayment effects \([PPEF]\):
-
It MAY repay the principal partially or totally, to all or some Investors before the maturity date (see Early Repayment section);
-
It MAY reduce the maturity date (see Variable Time Schedule section).
The prepayment effect MUST be identified with one of the following enumerated
IDs (uint8):
| ID | Name | ACTUS Acronym | Description |
|---|---|---|---|
0 | No Prepayment | \([N]\) | Prepayment is not allowed under the agreement |
1 | Prepayment Reduces Redemption Amount | \([A]\) | Prepayment is allowed and reduces the redemption amount for the remaining period up to maturity |
2 | Prepayment Reduces Maturity | \([M]\) | Prepayment is allowed and reduces the maturity |
255 | Custom | - | Prepayment is allowed and the effect is custom |
The prepayment effect MAY be set using the OPTIONAL set_asset_metadata
method (see Metadata section).
The implementation SHOULD manage the accrued interest on early repayments.
Penalties
Debt instruments may have a penalty as a consequence of an early repayment option.
The D-ASA MAY define a penalty type \([PYTP]\) (uint8) for the early repayment
options.
The penalty type MUST be identified with one of the following enumerated IDs:
| ID | Name | ACTUS Acronym | Description |
|---|---|---|---|
0 | No Penalty | \([N]\) | No penalty applies |
1 | Fixed Penalty | \([A]\) | A fixed amount applies as penalty |
2 | Relative Penalty | \([R]\) | A penalty relative to the notional outstanding applies |
3 | Interest Rate Differential | \([I]\) | A penalty based on the current interest rate differential relative to the notional outstanding applies |
255 | Custom | - | Custom penalty |
The penalty type MAY be set using the OPTIONAL set_asset_metadata method
(see Metadata section).
If the debt instrument has a penalty type with ID>0, the D-ASA MUST define
a penalty rate \([PYRT]\) (uint64) for the amount of the penalty.
The penalty rate is either the absolute amount or the rate of the penalty.
The penalty rate MAY be set using the OPTIONAL set_early_repayment_option
method (see Metadata section).