California's Union Bank is offering its first FX-linked certificate of deposit (CD) with an issue linked to Brik currencies.
The seven-year product is based on an equally-weighted basket comprising the Brazilian real, Russian ruble, Indian rupee and Korean won. The new Brik CD will offer an interest rate of 1.89% pa and participation on maturity of between 175%-200% (which will be set by the bank on strike) in the growth of the underlying basket.
This is the eighth CD by Union bank to be linked to a basket of currencies. So far this year it has marketed 31 CDs mainly linked to the S&P500 (13), with instances of other proprietary indices such as the DJ UBS Commodity Count (7), the DJ UBS Gold (1), the DJ Industrial Average (1) and gold (1). The estimated sales volume linked to these tranches is $300m.
FX-linked deposit products are on the up in the US, according to SRP data. Florida-based Everbank is also marketing its second CD based on this asset class. The four-year CD is linked to the Deutsche Bank Currency Returns index and guarantees in full the initial investment at maturity alongside 100% participation on the positive performance of the underlying.
This is the fourth CD to be marketed by Everbank this year with three tranches linked to a basket of commodities (gold, platinum, silver) and two linked to the DB Currency Returns (USD) Index. Estimated sales are around $30m.
Union Bank's CD will be available to investors until 23 November for a minimum investment of $1,000, while Everbank's CD will be open for subscription until 11 November. Minimum investment is $1,500.
Both products will be available shortly in Recent Additions (USA).