CFM92465 - Debt Cap: the available amount: regulations on money debt and manufactured payments

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

The Available Amount Regulations: Amounts included within the Available Amount

Interest on relevant non-lending relationships

The Available Amount Regulations include interest payable on relevant non-lending relationships arising under CTA09/S478 and S479 within the available amount to the extent that this is not already included. Further guidance on relevant non-lending relationships can be found at CFM41010 onwards.

Manufactured interest

Sale and repurchase agreements (repos) allows a company to obtain a form of secured loan using its own securities as collateral. Repos involve the temporary transfer of the ownership of the securities while the economic ownership is retained by the original owner. Interest or dividends received by the temporary owner are passed to the original owner in the form of manufactured payments. Further guidance on manufactured payments can be found at CFM46010.

The loan relationship rules deal with manufactured payments as though they are loan relationships. As a result relevant group companies will include manufactured payments within their financing expenses but the worldwide group will not bring into account an equivalent amount in the consolidated worldwide group accounts.

The Available Amount regulations deal with this by including manufactured interest payments within the available amount.