Corporate action events
PDEF: Partial Defeasance/Pre-Funding
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PDEF announces that the issuer has set money aside, usually in trust, to redeem part of an issue, and that under the bond’s terms those securities may be redeemed before their stated maturity. Holders are informed; any split of the position into a separate line follows the announcement.
- Code
- PDEF
- Usually announced as
- MAND
What PDEF means
Defeasance means the issuer puts assets aside, typically in a trust, to cover future payments on its debt. With partial defeasance or pre-funding, only a part of the issue is covered this way, and the indenture allows that part to be called earlier than the stated maturity.
MT564 has two additional business process codes that only apply in this context: :22F::ADDB//FPRE (full pre-funding, where the issuer deposits assets in trust before the original maturity) and :22F::ADDB//PPRE (partial pre-funding drawn by lottery, where a new security with an earlier maturity date is issued for the pre-funded part).
The mandatory/voluntary flag shown here (MAND) reflects that holders have no choice to make; the SMPG grid entry for PDEF could not be checked for this page.
When you see it
What to do next
- Read sequence D for
ADDBcodes and the narrative: they tell you whether the whole issue or a drawn part is pre-funded and whether a new ISIN appears. - Update credit and valuation data: pre-funded bonds backed by assets in trust are usually valued differently from the remaining unfunded part.
- Watch for the follow-on redemption event and reconcile it on the MT566.
Where it appears in MT and ISO 20022
MT (ISO 15022)
- MT564 sequence A (GENL),
:22F::CAEV//PDEF - MT564 sequence D,
:22F::ADDB//FPREor:22F::ADDB//PPRE