Interests

Debt instruments interest is calculated on a fixed or variable rate on the outstanding principal.

The interest rate is the nominal yield paid by the debt instrument on the principal, usually expressed as Annual Percentage Yield (APY).

The D-ASA interest rates MUST be defined in basis points (bps).

Interest Rate

The D-ASA MAY define a nominal interest rate \([IPNR]\) (uint16).

The interest rate MUST be set using the asset_config method.

Coupons

Debt instruments can pay interest in periodic installments, called coupons.

Coupons mature in a coupon period, according to a defined coupon schedule.

The D-ASA MUST define the number of total coupons K (uint64):

  • K>0 if the D-ASA has a defined number of coupons;
  • K=0 if the D-ASA has zero or undefined (perpetual) coupons.

Coupon Rates

Debt instruments can pay coupons with fixed or variable interest rates.

The D-ASA MAY define the coupon rates \([ARRATE]\) as uint16[] array, where:

  • The length of the array MUST be K, equal to the total coupons;
  • The K-elements of the array are the coupon rates, expressed in bps.

If the D-ASA has zero or undefined coupons (K=0), the coupon rates array MUST be empty and the interest rate MUST be used instead.

Coupon rates could be derived from the interest rate.

📎 EXAMPLE

D-ASA with 4 coupons with the following rates: 2,00%, 2,50%, 3,00%, and 3,50% would have the following coupon rates array (bps):

uint64[] = [200, 250, 300, 350]

📎 EXAMPLE

D-ASA with zero coupons would have the following coupon rates array (bps):

uint64[] = []

The coupon rates MUST be set using the asset_config method.

Accruing Interest

Debt instruments may accrue interest over time.

The D-ASA units MAY accrue interest \([IPAC]\), according to the day-count convention (see Day-Count Convention section).

If the D-ASA has coupons, the units accrued interest MUST be calculated with respect to the latest coupon due date.

📎 EXAMPLE

Let's have a D-ASA with 4 coupons. The 2nd coupon is due. The D-ASA units are accruing the interest of the 3rd coupon. The accrued interest is calculated according to the day-count convention, applied to the elapsed time with respect to the 2nd coupon due date.

If the D-ASA has coupons, the account units accrued interest calculation SHOULD fail if it has pending coupon payments.

📎 EXAMPLE

Let's have a D-ASA with 4 coupons. The 2nd coupon is due. The D-ASA units are accruing the interest of the 3rd coupon. Coupon payments are not executed synchronously for all the Investors. The 2nd coupon payment is executed for Investor A, while Investor B is still waiting for the payment settlement. The accrued interest calculation succeeds for Investor A and fails for Investor B until the 2nd coupon payment is settled.