Two methods, One result

By: Bernard Hecht

In SS&C’s DBC Finance Savings by Maturity Tool you have two ways to calculate savings off specific maturities: either by calculating using remaining maturity or by using individual maturity. In both cases you have access to reports that show your nominal, adjusted or calculated savings.

  • Method One: This is the most common method. In it, you compute the savings of each maturity by computing the refunding, including all bonds except for that maturity, then examining the difference in savings that results between that and the full refunding. To verify a maturity savings amount you can simply calculate the refunding analysis with and without a specific maturity to calculate the difference in Net Present Value (NPV) savings output and that amount matches when you run the entire refunding analysis through savings by maturity tool.
  • Method Two: Compute the savings of each maturity by computing a refunding with only that maturity, and examine the savings for the refunding. To verify a maturity savings amount you can simply calculate the refunding analysis with a specific maturity selected to produce its specific NPV savings output; and that amount matches when you run the entire refunding analysis through savings by maturity tool.

Providing these two methods of calculating savings by maturity is just one more example of how DBC Finance provides for all your needs when it comes to managing and structuring bond issues, calculating debt service and performing refunding analyses. If you have any questions about this or would like a more detailed step-by-step procedure of these methods, download our brochures, request more information or a demonstration or email us at solution@sscinc.com.