Principal

Debt instruments principal is the amount of capital borrowed and used as a base for calculating interest.

The D-ASA MAY define the principal \([NT]\) (uint64), expressed in the denomination asset.

If the D-ASA has a principal, it MUST define a minimum denomination (uint64), expressed in the denomination asset.

The minimum denomination MUST be a divisor of the principal.

The principal and the minimum denomination MUST be set using the asset_config method.

If the D-ASA has no defined principal, the principal and the minimum denomination MUST be set to 0.

Discount

Debt instruments principal may be placed at discount on issuance.

The D-ASA MAY define a discount rate \([PDIED]\) (uint16) in bps to apply to the principal on the issuance.

The discount MUST be set using the asset_config method.

📎 EXAMPLE

Let’s have a D-ASA denominated in EUR, with a principal of 1M EUR paid at maturity and a minimum denomination of 1,000 EUR. The D-ASA has a principal discount of 200 bps (2%) at the issuance. Each D-ASA unit is sold on the primary market at 980 EUR and will be redeemed for 1,000 EUR of principal at maturity.

Amortization

⚠️This section is still subject to major changes and reviews.

Debt instruments principal may be amortized until maturity, according to an amortization schedule.

If the debt instrument has principal amortization, the D-ASA MUST define the amortization rates as uint16[] array, where:

  • The length of the array is N=K+1, with K equal to the fixed total coupons (see Coupons section);

  • The first Kelements of the array are the amortizing rates associated with coupon payments;

  • The last element of the array is the amortization rate associated with outstanding principal payment at maturity date;

  • The elements of the array are expressed in basis points (bps);

  • The sum of all the amortization rates is equal to 10,000 bps.

The amortization rates define the amount of principal \([PRNXT]\) paid at the next payment date.

📎 EXAMPLE

A D-ASA with 5 coupons and even principal amortizing rates has the following amortizing rates (bps):

uint64[] = [2000, 2000, 2000, 2000, 2000, 0]

📎 EXAMPLE

A D-ASA with 5 coupons and a single principal early repayment of 50% has the following amortizing rates (bps):

uint64[] = [0, 0, 5000, 0, 0, 5000]

📎 EXAMPLE

A D-ASA with 4 coupons and different principal amortizing rates (bps):

uint64[] = [1000, 2000, 3000, 4000, 0]

📎 EXAMPLE

The following are invalid amortizing rates, since their sum is not equal to 10,000 bps:

uint64[] = [1000, 2000, 3000, 4000, 5000]

The amortizing rates MUST be set using the OPTIONAL set_amortizing_rates method.

The amortizing rates MAY be updated with the OPTIONAL set_amortizing_rates method.

The updated amortizing rates MUST NOT modify past amortizing rates.