From the Administration Section, select the Regions and Users tab. Select the Funding Package you would like to apply a funding curve adjustment to.
Check the "Funding Curve Adjustments" box.
If you want your funding curve adjustment to apply to loans of all durations, enter the amount of the adjustment and click "Save". If you want to create varying funding curve adjustments for loans of varying duration, click "Add Adjustment". This will allow you to specify various periods of time and the amount of each adjustment.
If you want to delete any adjustments, click the trash can icon (). When you are done, click "Save".
- The duration on a funding curve adjustment specifies that the adjustment be applied to all points below it, that do not already have an adjustment.
- Example: An adjustment with duration 12 for LIBOR, would adjust the 1,3,6 and 12 month points of the curve.
- Example 2: An adjustment with duration 12 of 1% and another of duration 60 of 2% to LIBOR would give: points for the 1,3,6 and 12 months would be adjusted up 1% and points for the 24,36, and 60 months would be adjusted up 2%.
- You can only adjust points on a funding curve that are actually there.
- Example: An adjustment of duration 18 month on LIBOR would adjust the 1,3,6,12 month points, but it would not add an adjustment at 18 months because there is no 18 month point on the LIBOR curve.
- Multiple Adjustments with between points on a curve will make no difference
- Example: Making the following funding curve adjustments to LIBOR:
Duration Adjustment 13 1% 14 2% 15 3%
would result in the points on LIBOR for months 1,3,6,12 being adjusted up by 1%. The adjustments made for months 14 and 15 make no difference because there are no points there on LIBOR to adjust, and the preceding points will be adjusted by the equal or closest higher duration adjustment, which in this case, is the 13 month adjustment.