Exane Derivatives has launched a new investment certificate in Italy offering regular income payments, an autocallable option, and unconditional protection at maturity, a first of its kind in the market.
The Crescendo Rendimento Memory 70%, linked to a basket of uncorrelated shares (Netflix, Saipem and Glencore), offers monthly coupons of 1% provided that all three shares register at or above 70% of their initial levels. From the fourth month, the certificate can knock out and mature early if all three shares are at least equal to their initial levels. The certificate is armed with a memory effect feature, meaning that any missed coupons will be paid in full at the first opportunity; at maturity, any falls registered in the worst performing share are limited to 30%, with the remaining 70% of capital unconditionally protected.
"The aim of this certificate is to marry the regular flow of coupon payments typical of an Exaneone product with the capital protection features of an Express certificate, creating a certificate offering unconditional capital protection," said Melania D'Angelo, head of private banking sales, Italy, at Exane.
Income structured products, which are in growing demand in Italy due to the historic lows seen in the bond market, typically offer capital protection but low coupons (see Banca Aletti's Target Cedola range), or relatively high coupons but only conditional (or soft) protection by way of a barrier (see the increasingly popular Phoenix-style certificates). With a potential yield of 12% a year, this latest offer from the French derivatives expert supposedly eliminates this trade-off.
Exane Derivatives estimates that quantitative easing in the Eurozone will likely be extended for another round in late 2015 / early 2016, causing bond yields to remain at record lows for longer. In light of this, Exane has expanded its new offer to six products, listed on the EuroTLX and, most recently, on the SeDex of Borsa Italiana.
Like the Crescendo Rendimento Memory 70%, the certificates pay monthly coupons and offer exposure to baskets of international shares and even currencies; capital protection ranges between 50% and 70%, depending on the underlyings.
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