Dutch bank ABN Amro has launched Safety Net, its second bond with a bearish payoff in the Italian market. The first, Trio Plus 31/10/12, raised an impressive €204m in its one-month offer period.
Denis Beltramini, head of sales Italy third parties with the Dutch Bank in London, said such products are launched to profit from the current uncertainty in the market and respond to investor demand for products with guaranteed coupons during the investment period.
“Trio Plus not only offers a fixed annual coupon of 4% in the first two years of investment,” he said, “but also allows investors to profit from a diversified basket[...] Moreover, the bearish payoff helps the investor if markets do not perform well: if the three underlyings register a negative performance, the product matures early and returns a 10% coupon for every year of investment. Therefore, we believe Trio could be a good investment for both rises and falls in the markets.”
Safety Net is a bond linked to a basket comprising the DJ Eurostoxx50, iBoxx and S&P GSCI Excess Return indices, paying a fixed 4% coupon in the first and second years of investment and early redemption in subsequent years if the indices in the basket register a level equal to or below their starting levels. If this condition is not met, the product continues until maturity and pays 45% of the basket’s performance. The product is distributed by Banca Popolare di Milano group.
Trio Plus 31/10/2012 was linked to the DJEurostoxx50, the iBoxx and Rogers International Commodity indices and pays 63% of performance if early redemption did not occur. The bond was distributed by the banks of the UBI group.
Beltramini said expectations for the future are, "very positive". “So far this year, ABN Amro has almost doubled its 2006 issuance, consolidating its leadership of the Italian market. We think the market will maintain its upward trend and we are ready to respond to the increasing demand for structured products in Italy,” he said. He added that the flexibility offered by certificates in terms of payoffs and underlyings allows the bank to respond very quickly to investor demand and market trends. “In terms of innovation,” he said, “ABN Amro will continue to introduce new underlyings through payoffs already consolidated in the market such us Twin-win autocallable [bull-bear/knock out]. In these products we will introduce innovative underlyings, as we did in the past with a product linked to the Turkish Lira or the South African Rand.”
According to SRP data, ABN Amro has launched 207 structured products in Italy in 2007 and is one of the most active issuers in terms of innovation. The Dutch bank was the first to offer a structured certificate linked to biofuels, to the Bric currencies and to the Spanish Ibex index, among others, in Italy.
These products appear in Recent Additions (Italy).
