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TransactionsCore11 min

Rollover and repricing lifecycle

Understand how an existing loan moves into a new interest period without losing principal or pricing continuity.

Purpose

Explain the difference between principal continuity and a new pricing period, including the controls around dates, rates and borrower instructions.

Before you begin

Prerequisites

  • Current outstanding position
  • Upcoming repricing or maturity event
  • Valid borrower rate or period instruction
  • Current pricing and benchmark terms

Operational sequence

Workflow and validations

01

Review the maturing period

Confirm principal, current rate, accrued interest and scheduled event date.

Control check: The current period is complete and exceptions are understood.
02

Validate the new instruction

Confirm rollover amount, repayment portion, interest period and pricing selection.

Control check: Instruction timing and available options agree to the agreement.
03

Resolve cash components

Separate principal continuation from interest, fees or any principal repayment.

Control check: Net cash expectations are clear to all settlement parties.
04

Establish the new period

Apply the new start and end dates, benchmark inputs, spread and applicable floor.

Control check: There is no unintended gap or overlap in accrual periods.
05

Confirm and reconcile

Issue notices and prove principal continuity, rate application and cash.

Control check: Old-period closure and new-period opening agree end to end.

Troubleshooting

Common breaks and response

Unexpected principal cash is generated

Likely cause

A rollover was treated as repayment plus new draw, or the continuation amount was entered incorrectly.

Controlled response

Pause release, compare the instruction and intended transaction structure, and correct through approval.

Interest period has a gap or overlap

Likely cause

Start, end or business-day adjustment was applied inconsistently.

Controlled response

Rebuild the date logic from the agreement and reconcile accrued days.

New rate differs from expectation

Likely cause

Benchmark date, spread tier, floor or rounding input is incorrect.

Controlled response

Evidence every rate component and compare with an independent calculation.

Connected impact

Downstream effects

  • Interest accrual and billing
  • Cash and lender settlement
  • Rate notices
  • Accounting period recognition
  • Upcoming event monitoring

Control record

Audit evidence

  • Borrower rollover instruction
  • Rate source and calculation
  • Old-to-new period reconciliation
  • Required notices
  • Approval of exceptions

Practical context

Scenario: partial rollover

A USD 10 million loan reaches its repricing date. The borrower repays USD 2 million and rolls USD 8 million into a new one-month period. Operations must separate the principal repayment from the continuing balance and settle the ending-period interest.

Knowledge check

Check your understanding

Why can a rollover create cash even when principal continues?Show answer
Ending-period interest, fees or a partial principal repayment may still settle. Principal continuity does not mean every component is cashless.

Next guide

Exceptions, maker-checker and audit evidence

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