Crelan changes its issuance pattern and introduces the first ever Canadian dollar denominated note in Belgium while at the same time putting inflation back in the spotlight.

Crelan has launched two autocallable notes, both with an investment term of five years, issued by Credit Suisse and Societe Generale in Belgium. The first product is denominated in Canadian dollars - a first for the local market - and can be redeemed early after two or four years of investment, depending on the performance of the iStoxx Global Women Leadership Select 30, an index which now has been used three times by the bank as an underlying for its structured products.

"This is an index and a theme that we fully support," said Koen Theys (pictured), product manager, product management off-balance sheet at Crelan. "In fact, in our own board and management, we have gender diversity. So, in that respect, the product fits perfectly within our company. Our customers certainly appreciate this. It has been a successful formula, and the index has been a success in our network."

There are two reasons why Crelan has opted for a Canadian dollars, according to Theys. "The main reason is that, if we were to do a 100% capital protected product in euros, the investment term would be at least 10 years, because the interest rate in euros is very low," said Theys. "This means that we have more 'fuel' to create a product, so we can either shorten the investment term, for example, from 10 years to five years, or we can improve the product conditions, or we can combine the two," said Theys. "In this case, we chose to shorten the term, because we think a 10-year investment is relatively long and we want to meet the demand of clients who want to invest in the short-term products."

Crelan specifically opted for the Canadian dollar because the bank wanted more diversification in its portfolio, according to Theys. "We have already launched products in Norwegian kroner, and in Australian and US dollars," said Theys.

The second product, which is linked to the Solactive European Inflation-Linked Companies Index, is a follow up to the 100% protected inflation-linked note launched in January and well liked in Belgium, according to Theys. "We sold more than we had expected from placing the product in our network."

In recent years, inflation, as a theme, has not really been addressed, according to Theys. "Due to the growth in the past few years, especially due to the low interest rates, inflation did not apply," he said. "Now, we see the first signs of a lasting recovery and, in that respect, we feel that inflation may well rise."

As opposed to the original product, which protected all the capital, the second tranche only offers 90% of nominal. "In the past, we have done double launches, giving our clients the choice between a product with 100% capital protection and an additional product with 90% protection - both with the same underlying and more or less the same structure," said Theys. "This time, we have decided to deviate a little from that scenario in the sense that now, simultaneously, we also bring a product in a foreign currency. The duration, at five years, is the same, but both the issuer and the underlying index are different."

Click the link to view the guideline for the Solactive European Inflation-Linked Companies Index and the iStoxx Global Women Leadership Select 30 Index.

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