Deutsche Bank has collaborated with Natixis for the launch of Fund Opportunity Coupon Note PLN 2023 in Belgium. The five-year, capital-protected, medium-term note offers a yearly coupon equal to 100% of the annualised performance of the M&G Dynamic Allocation fund and is the first structured product denominated in Polish zloty on the SRP Belgium database.
"There is a relatively large maturity coming up of a Polish zloty-denominated fixed-rate bond," said Christophe Blontia (pictured), senior product manager at Deutsche Bank in Brussels. "The new note is aimed at investors who were in that product and want to continue investing in zloty. That aside, our house view on the currency is relatively positive. We believe that the zloty offers interesting potential because of solid economic key figures and its recent depreciation."
The note should also attract people not invested in PLN, according to Blontia. "Due to the higher interest rates in zloty, we are able to offer a product with a shorter maturity than we would have for similar products in euros. In this specific case, we also offer a minimum coupon of 1% pa."
The bond that has reached maturity paid a fixed annual coupon of 5% over a six-year investment term. "We believe that the largest part will be reinvested in the new note," said Blontia.
Deutsche has launched products in seven different currencies this year, which, aside from euros and US dollars, include Australian and New Zealand dollars, Norwegian krone, Swedish krona and now zloty. "For most structured notes, we launch in foreign currencies, mainly to match maturities in the particular currency. That is certainly true for our recent issues in New Zealand and Australian dollars, but also for the products denominated in Swedish krona and Norwegian krone we did earlier this year," said Blontia.
The only exceptions are the US dollars products, which are often not linked to maturities, according to Blontia. "For US dollar products, there is simply more historical demand from our clients, also because we have been very positive about the dollar in recent years."
Despite the fact that Deutsche is the market leader in Belgium when it comes to fund-linked products (the bank was responsible for 14 of the 16 fund-linked products distributed in 2017), it has issued fewer products in this asset class than in previous years, with the Fund Opportunity Coupon Note PLN 2023 only the sixth fund-linked note from the bank this year.
"We still believe in these products and, when you look at fund-linked products we have launched in the past, the performance has been, and still is, very good," said Blontia. "However, it's true that, towards the end of last year and the beginning of this year, the interest rates were almost too low to offer attractive conditions for this type of product and, therefore, we haven't issued any fund-linked products for a few months. But as rates have risen slightly, and also due to the increase of the banks' credit spreads, it has allowed us to once again offer fund-linked structures.
"Such products are rather expensive to structure, but we have managed to do so with different issuers, especially on a 10-year term, and we will definitely continue to offer fund-linked products to our investors," said Blontia.
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