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I think my example is more in line with the following: An investor might hold an instrument other than an ordinary share of an investee (that is, non-ordinary shares). The non-ordinary shares might provide one or a combination of the following rights: voting rights, dividend participation rights, li...

Hi Everyone We have invested in convertible loan notes which give us rights to 2 Board seats (out of 7) and a Board observer. We also have some consent rights over relevant activities of the investee. On that basis we concluded we have a 'significant influence' so our investee in an associate. Howev...

We’re a policy bank so financial considerations play second fiddle in everything we do. First we want to fulfil our mandate of supporting net zero transition and creating regional and local jobs. So yes, we’re out there to support growth of the companies and particular business models, etc. Liquidat...

Great explanation Ketan. Helps in furthering my understanding as well. It’s first time I’m holding some debt at FV this year. Thanks

There's quite a difference in booking dividends on shares and interest on bonds with both instruments held at FV. Dividends on shares (as long as they are equity) are posted in PnL as 'dividend income' whereas interest on FV bond is posted as FV gains.

Hi Everyone, I'm curious to hear what people are thinking. We invested via convertible preference shares which are irredeemable, pay dividends on par with ordinary shares at Board discretion and can be converted 1:1 into ordinary shares at any time at our discretion or mandatorily in certain circums...

Yeap, I know this. My question is if what I described above qualifies as a tenor mismatch. Every six monthly re-price effectively affects only future (yet to be drawn) tranches. The already lent money is not affected, i.e. after six months the six monthly drawdowns are consolidated into tranche that...

With corporate or project finance you're usually getting the arrangement fee (payable upfront) and commitment fees (for undrawn amounts) and we're getting both. This 'exit fee' is what's remaining from the original transaction structure where it was more equity-like. It evolved into senior debt but ...

Thanks Marek. This part makes sense. I'm getting a bit confused about tenor mismatch. I guess you're saying it's not given the repricing only affects cash flow forecasts, right? If existing (actual) tranches get re-priced every six month to 20 year benchmark that would clearly make the mismatch the ...

The problem I have with this is answering the question what am I being remunerated for if that fee is payable on maturity? Just an additional return on top of the interest. Not quite a feature of the standard loan so including it in the EIR could be questionable I think?

Hi Everyone, I have this weird fee in the loan facility agreement. It's not a 'basic loan feature' and formally it would fail SPPI I think. On the other hand, measuring the loan which is SPPI compliant in all other aspects at fair value wouldn't really provide the useful information in my opinion. W...

I've just realised I have a bigger problem with this facility. Every six months where monthly drawdowns are consolidated into tranche which is fixed for 20 years the gilts benchmark used is 20 years one. So all future 6 monthly tranches are effectively re-priced every six months to 20 year benchmark...

In our system we have only one facility, one EIR and one amortised cost for these deals. Each subsequent drawdown is treated as a cashflow within a period (similar to coupon payment) and adjusts the closing balance. At the same time new EIR is calculated (assuming drawdown amounts and timings change...

@jakobLavrod You can do it in excel but not accounting system fed automatically.

Correct, but as soon as the loan starts being drawn the commitment fees are included in EIR. The question is what EIR if each drawdown would have its own amortised cost.

Hmm, interesting view. How would commitment fees on total facility amount however be captured in EIR in such a case? They ‘beling’ to multiple undrawn tranches.

Thanks Marek. Let me have another question as I've never been quite sure how you would correctly handle this. Corporate and project finance loans usually have an availability period allowing the borrower to draw the loan amount in tranches. Let's say £100m loan is drawable over 1year with indicative...

Many thanks Marek.

Hi Everyone,

It's a first year end for me to disclose interest in associates. Would anybody be able to recommend some company's annual report with good associate disclosures?

Thank you

Hi Everyone, We're about to provide lending to a really big project. Our loans will be drawn on monthly basis priced at 1 months Gilts + industry credit index value for each monthly drawdown. After 6 months the drawdowns will be 'consolidated' into a tranche repriced to 1 month Gilts + industry cred...

No, IPO, change of control, etc. are not liquidation events according to IFRS

Just theoretically, if it wasn't the ''active market' what would be the implications? How would the fair value of such shares be established?

Ultimately, I will not need to worry about fair value changes as far as I can see. Given recent share price performance we'll apparently going to end up with +20% stake indicating the 'equity method'.

But I still need to report my holdings at market price which with a spike can result in massive fair value gain pretty soon, correct?

Hi Everyone, I have the first direct equity investment to be made. The Company is listed and is seeking the additional equity funding issuing ordinary shares. As per the terms we will subscribe for ordinary shares at a price per share being a 5% discount to the 15 day volume weighted average price o...

The arrangement fee won't be reported as a guarantee liability. I will be receiving the regular 6 monthly guarantee fees which present value I will recognise as a guarantee liability in line with IFRS 9.4.2.1 (c). Arrangement fee is a different kind of fee. I've received it upfront and it's not refu...

Hi Everyone, We've just signed a FCG contract where the underlying debt is drawn in tranches over 9 months and then repaid in bullet after 7 years. Our cover follows this, so it grows to the total debt drawn over 9 months period and then stands flat until maturity (assuming no claims of course). The...

No, definitely not. One is an investment in a commodity miner and the price of that mineral is highly volatile.

I meant the existing disclosures for Level 3 investments. Anyway... I didn't specify in my original message that our equity-like investments are convertible preference shares and convertible loan notes. Cost exceptions in IFRS 9.B5.2.3-B5.2.6 seem to relate more to investments in unquoted equity. I'...

Yeap, I could use this reasoning I think. We wouldn't never convert into ordinary shares just for the sake of getting dividends or being shareholders. We would only do it once there's a sizeable upside available, meaning sale to 3rd party, IPO, etc.