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Jan 26, 2010 at 03:33 AM

Accretion of Loan Transaction Cost

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Hi All,

All loan transactions of my client has transaction cost which should be capitalized and therefore amortized monthly to get the true carrying value of the loan. Here is a sample data;

Corporate loan borrowed from a Finance Corporation;

Drawn amount = Php 15,000,000

Related Transaction cost = Php 400,000

Initial Carrying value = Php 14,600,000

The 400,000 should then be amortized using calculated Effective Interest Rate

What product type should I use to be able to use the amortization step in Position Mgnt Procedure? Initially, we have used product category 550 - Interest Rate Instrument since it is able to handle loan facility. But when assigning amortization step, a message appears in TPM1 saying "product category 550 is not supported by the amortization step"..

Amortization for securities module is working but is not able to handle loan transactions due to facility and multiple drawdowns.

Any other option?

Thanks,

Chaikaru