Reporting of “end date of interest-only period”

Question

How should the “end date of interest-only period” be reported in the following cases? Sometimes, a product can have a number of interest-only periods in the course of its lifetime. For example, a debtor might start with two years of repaying the principal, followed by a three-year interest-only period. What should the end date of the interest-only period be, and how should it be reported to AnaCredit? What if there are multiple interest-only periods during the product’s lifetime? Which end date should be reported?

Answer

The data attribute “end date of interest-only period” indicates whether, on the reporting reference date, the instrument is within a contractually defined period during which the debtor is paying only the interest. If so, the end date of the current interest-only period should be reported. If it is not, but an interest-only period has already been completed (and regardless of whether there will be another such period in the future), the end date of the most recent interest-only period should be reported. If the instrument is not interest-only on the reporting reference date and has not been at any point in the past, the correct response is “Non-applicable”, regardless of whether an interest-only period is due to start at some point in the future (i.e. after the reporting reference date).

Finally, if an interest-only has already ended (i.e. the end date of the interest-period is in the past) and the instrument is not interest-only at the reporting reference date, the past end-date is reported (i.e. there is no need to update the instrument dataset).By way of illustration, the example below considers the case of an instrument with multiple interest-only periods during its lifetime.

A five-year instrument is originated on 1 January 2019, and the parties agree that in the second and fourth years of the instrument’s life, the debtor will pay only the interest on the principal balance. Thus, the instrument has two contractually defined interest-only periods. This should be reported as follows:

  • For all reporting reference dates in the first year (i.e. up to 31 December 2019), the “end date of interest-only period” should be reported as “Non- applicable”, as both interest-only periods are in the future.
  • In the second year, the instrument is interest-only on all reporting reference dates, and the “end-date of interest-only period” should be reported as “31 December 2020”.
  • In the third year, the instrument is not interest-only on any of the reporting reference dates. However, as the instrument was interest-only in the previous year, the end date of the previous interest-only period (i.e. 31 December 2020) still applies.
  • In the fourth year, the instrument is interest-only on all reporting reference dates, and the “end date of interest-only period” should be reported as “31 December 2022”.
  • In the fifth year, the instrument is not interest-only on any of the reporting reference dates. However, the end date of the previous interest-only period (i.e. 31 December 2022) still applies.

Related questions

See also Instruments regarded as interest-only

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