The telecom giant’s recent 56% dividend cut calls into question the wide use of decrement indices in Canada and France, particularly those on single stock.
The dividend cut at an unprecedented scale during the Covid-19 pandemic remains a cautionary tale for many structured products issuers. Decrement overlays have since gained ground in markets like France, Canada and more recently the US as a way to better cope with the dividend risk. With the world economy continuing to recover from the last crisis, a severe dividend cut of the underlying stock can leave investors vulnerable as the deduction amount from total return becomes materia