The Royal Bank of Scotland (RBS) has announced that the Royal AEX bonds with a coupon barrier of 290 points and anniversary in June will pay a coupon this year.
Since the start of the series in June 2009, a total of 43 out of a possible 45 coupon payments for Royal AEX bonds with annual interest of 4.5%, 5% and 6% have taken place.
The five-year capital guaranteed Royal AEX bonds - of which 61 have been issued by the British bank in The Netherlands - pay an annual coupon of 4.5%, 5%, 6%, 7.5% or 10%, respectively, providing that the Amsterdam Exchange Index (AEX) trades above a predetermined barrier on the observation date.
"As an added plus, because of the low interest rates and the increased credit worthiness of RBS, the price of the AEX bonds are generally far above their starting price of 100%," said Jean-Paul van Oudheusden (pictured), managing director at RBS Markets & International Banking.
According to van Oudheusden, investors in RBS AEX 140 5% 31 augustus 2016 can sell today and receive a 112.9% yield in the secondary market.
The recent rise of the AEX by approximately 30 points during the past 30 days increases the chance of a coupon but the bond is less attractive to new investors, due to an offer price of 113.40%, as the effective yield falls to 2.6% per year.
"The same goes for any possible new series of Royal AEX bonds, which has led us to decide not to introduce a new series at the moment," said van Oudheusden.
While 95% of coupon payments for the Royal AEX 4.5%, 5% and 6% bonds have been fulfilled, the Royal AEX 7.5% bond saw only five out of a possible 15 coupon payments, while investors in the Royal AEX 10% bond have yet to see a single coupon payment.