HSBC has released a new structured capital-protected certificate of deposit linked to the performance of the USD/MXN exchange rate in the Mexican market, its first 'wedding cake' combining a digital/range payoff profile issued by HSBC Mexico in its history.
The 49-day deposit offers full capital protection at maturity plus an additional coupon if the underlying stays within one of two predetermined ranges at all times during the investment period. Otherwise, in the worst possible scenario, investors will receive a capital return of 100% plus 1% pa if the underlying falls out of both ranges.
Wedding Cake Peso/Dollar - 6.8% pa - 02 August 2012 sold MXN82.85m ($6.26m) during its subscription period.
According to a source working on the structured products desk at HSBC Mexico, the wedding cake structure provides an alternative for attractive returns without assuming too much risk in a low volatile FX rate market. The primary incentive for the launch was to provide clients with more diversity in their portfolios.
HSBC is planning to issue similar pay-off structures in the upcoming months.
SRP data shows that HSBC Mexico has launched 26 range accrual products so far this year and it is currently holding a 6% market share, falling just behind BBVA Bancomer, Monex and Citi.