Quantum Ideas Portal
Welcome to the FIS Treasury and Risk Manager - Quantum Edition Aha! Ideas Portal.
By visiting this portal, you will be able to contribute towards the evolution of the Quantum solution through interactions with other Quantum users, FIS trusted partners and FIS staff from around the world. Each Portal User receives 5 votes. Each user is allowed 1 vote per idea. Votes are reset when an idea is in a final state i.e. Shipped (delivered in the product).
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AES currently only have one borrowing, but have said they will most likely have more in the future
These are Yield-CDI Periodic fixed rate borrowings with indexation where the principal balance being adjusted/indexed based on the Brazilian IPCA (CPI)
The indexation formula calculates an index ratio by comparing the current month’s CPI to the previous month’s CPI. The indexation occurs on the 15th of each month or next business day.
The deals have daily compounding and monthly indexation on the 15th of each month, when the principal balance is adjusted by the index ratio. This does not result in a cash flow, it is a notional adjustment to the principal balance. Interest is paid semi-annual also on the 15th of the month. At maturity, the full indexed principal balance is paid back to the counterparty.
Amortization are possible, scheduled and unscheduled
Month end accrual posting - Because IPCA doesn’t get released until the 1st week of each month, the current IPCA is unknown for the first 3 weeks of each monthly indexation period (15th of previous month to the 1st week of current month). Due to this an indexation estimate is calculated for month end interest accrual posting. What currently happens once IPCA is released?
Once IBCA is released then need to calculate
Automatic reversal
End of month value -
The estimated indexation mentioned above is based on the last published IBCA plus a % adjustment for the current month (usually positive), which is published by the Brazilian Govt. Some debt use previous months known IBCA. If something that can be automatic as part of month end processing
There are 10-12 of these type of debt deals out of a total of 20 or so debt deals.
Finally, their debt deals are tax exempt.