How to record in FundManager bond restructuring?

[nebfinfm]

The following situation happened in December 2013. I had 15 Notes (OldBonds) at nominal value EUR 1 000 each, normally recorded in the Fund Manager…..

Lately the OldBond Issuer gets into trouble and there was a danger of default. The major Note Creditors (OldBondholders) agreed to following: The OldBond Issuer former Notes have been cancelled and de-listed on the Luxembourg Stock Exchange (LSE). The OldBond Issuer issued new Notes and one of the major stockholder of the OldBond Issuer issued Shares. The new Notes and the Shares are stapled into Units and trade together as the Units.The Units have classical bond characteristic and have been listed on the LSE.

As consideration for above, the OldBondholders received for each OldBond 27,7% in cash (EUR 277.27) and 72,3% in Units which equals 19,39 Units per EUR 1 000 bond. Each Unit has actual value EUR 1,29 and coupon rate 9% paid semi-annually. So I received for my 15 OldBonds EUR 4 159,09 in cash plus 2 909 Units plus EUR 101,82 coupon.

Now can somebody tell me how to record this mess? Many, many thanks in advance

Nebfinm

[Mark]

Hi Nebfinm,

It probably depends on if you want to maintain some cost basis between the old/new units, and how that cost basis is supposed to be transferred. If you don't need to track the cost basis, you can just record a sell of the original units, and a buy of cash and new units, with the appropriate amounts.

Since it sounds like you only owned 1 lot (of 15 units, all purchased at the same date/price), you can also use a "Transfer Out" in the old units and a "Transfer In" for cash, and another Transfer In for the new units. By using the transfers, you can record the original cost basis, into the new cash/units.

[nebfinfm]

Hi Mark, thanks for your prompt reply..

Unfortunately I forgot to mention that I bought OldBond in 3 x 5pcs lots at different prices..Nevertheless most likely I will use method firstly suggested. ......

If you don't need to track the cost basis, you can just record a sell of the original units, and a buy of cash and new units, with the appropriate amounts.

. The question is : for what price I sell the original units?

I have another question: I'm retrieving prices from European Boerse's (Berlin and Stuttgart). Do you plan to retrive prices from Bourse de Luxembourg? It will be very helpful

Once more many thanks for prompt reply


nebfinfm

[Mark]

Hi nebfinfm,

If you aren't worried about showing a realized gain/loss, and want to use sells/buys, you can just make sure that your total sell amount equals the total buy amounts of the cash and new units. You could record all of this at the market value on the date of the exchange.

Thanks for the feedback on the new quote server. Do they offer bond quotes, not available on any of the other servers?