Corporate action events
PCAL: Partial Redemption With Reduction of Nominal Value
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PCAL announces that the issuer repays part of a bond issue before maturity by reducing the nominal amount: each holder’s position goes down in proportion and the repaid part is paid in cash. It is mandatory.
- Code
- PCAL
- Usually announced as
- MAND
What PCAL means
In a PCAL every holder is repaid the same percentage of their holding. The face amount held is reduced and cash is paid for the reduced part. Since the ISO 20022 renaming, the code’s name in seev messages is Partial Redemption Without Pool Factor Reduction, which says the same thing from the other side: the nominal moves, there is no factor.
The ECB SCoRE rulebook shows two ways the reduction can be expressed: as a rate (for example 10 percent of the holding), or as a new denomination per bond, from which the reduction is derived. In MT564 the rate is the applicable rate (:92a::RATE) and the price the redemption price (:90a::OFFR).
When you see it
- In an MT564 with
MAND, record date and payment date; often alongside an INTR on the same day. - PCAL vs PRED: in PRED the nominal held does not change and the repayment is expressed through a pool factor. PCAL vs DRAW: a drawing repays particular bonds chosen by lottery, so only some holders are hit. PCAL vs MCAL: MCAL repays the whole issue.
What to do next
- No instruction. On the MT566, check both legs: the debit of face amount (sequence D1) and the cash credit (sequence D2), equal to the debited nominal times the redemption price.
- Update the position and the accrued interest basis: later coupons are paid on the reduced nominal.
- Check pending trades and loans: deliveries after the record date may need to be adjusted for the reduced quantity.
Where it appears in MT and ISO 20022
MT (ISO 15022)
- MT564 sequence A (GENL),
:22F::CAEV//PCALwith:22F::CAMV//MAND - MT564 sequence E2,
:92a::RATEand:90a::OFFR - MT566 sequence A,
:22F::CAEV//PCAL