Erste Group Bank has launched a reverse convertible certificate linked to three gold mining companies. The Protect Multi Goldminen 2016-2017 pays a fixed 10.5% coupon and returns 100% of the nominal invested providing Barrick Gold, Newmont Mining and Agnico Eagle Mines do not trade below 50% of their respective strike levels during the one-year investment period.
It is the first time the bank has used gold mines as underlying for its certificates, according to Thomas Mlekusch (pictured), capital markets, fixed income and certificates sales at Erste Group Bank in Vienna. "We issue multi reverse convertibles on a consistent basis, almost every month, and we have never issued on goldmines before," he said.
The three mining companies were selected after a discussion with the bank's research department, according to Mlekusch. "[This certificate] is only meant for retail clients, mainly private banking and upper mass affluent," he said.
The product is available to investors in both Austria and Germany and will get a listing, from August 29, 2016, on the exchanges of Frankfurt, Stuttgart and Vienna.
The certificate is aimed at investors targeting a return even in case there is a slight decline in the underlying assets and the fact that the exchange rate of the product, which is denominated in euro, differs from that of the gold mining companies (US dollar), has no direct impact on the redemption amount, according to Erste.
Mining companies underlying core structured products are a rarity in Austria, according to SRP data. Barrick Gold is seen in 20 products (from eight different providers) dating back to August 2008 while Newmont Mining (11) and Agnico Ealge Mines (one) are used even less.
Erste Group Bank has launched 115 structured products in Austria in 2016 to date. The vast majority are linked to equities, including 75 products linked to a single stock; 20 products linked to an index; and 10 products linked to a basket of shares. Wienerberger and Immofinanz, both seen in seven products, are the most used shares, followed by Vienna Insurance Group (six) and Lenzing AG (five). The Eurostoxx 50 is the most popular index (eight products) ahead of the CECE Composite Index (four) and the Finvex Ethical & Efficient Europe 30.
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