As part of its strategy to attract risk-averse local investors, Mexico's Banamex issued CD Sharkfin FX, the retail market's first currency linked deposit with a capped call/digital structure.
The one-month capital-protected product pays a rate of 2% pa at maturity, plus 8% of the positive numerical difference between the initial rate and the final rate strike, where the USD strengthens against the MXN. If however the rate hits 15.05 pesos per dollar at maturity, a fixed coupon of 6% pa is paid.
If, however, the dollar has fallen capital is simply returned with a 2% pa coupon . In best case scenarios, the investor gains 11.6% pa.
Last Tuesday after President Felipe Calderon asked for a $47bn credit line from the International Monetary Fund, the Mexican peso strengthened against the dollar breaching the 14 pesos barrier for the first time since last January. This product bets on a reversal in this trend.
The CD Sharkfin FX appears is aimed at the cautious local market, where investors are little motivated to participate in equity products.
This product appears on the Mexican database.