Caixa Geral de Depósitos has sold €179m with a 5-year digital structured deposit, which closed its subscription period on 30 October, making it the best-selling product in the Portuguese market so far this year.
Tiago Fernandes, derivatives analyst at Caixa Geral told SRP that the TaxaMix is part of a range of products with several years of history and that the average Caixa Geral client understands this product as a standard long-term savings product.
“While most SP’s are built to compete with direct investment in risky asset classes (e.g. equity), whilst providing a capital guarantee, the TaxaMix product competes with the traditional deposits,” he said. “We have to take into account that in a low interest rate environment, Portuguese savers prefer to have a potential upside in their savings if interest rates starts to rise.”
Although the Euribor 6 Months is below the 20 bps mark and the ECB expects to maintain the low interest rate environment for a while, investors believe that from the current status the upside potential gain is high if inflation starts slowly going up, said Fernandes.
Caixa TaxaMix V outubro 2019, is a fully protected income structure linked to the Euribor 6-month rate. The product will pay a fixed semi-annual coupon equal to 2% AER for the first year. For the second, third, fourth and fifth year, the product offers half-year coupons equal to the underlying rate. Coupons are subject to a floor of 2%, 2.05%, 2.10% and 2.15% and capped at 3%, 3.05%, 3.10%, and 3.15% AER respectively.
Caixa Geral de Depósitos, the third biggest seller of structured products in the Portuguese market last year with estimated sales of €558m, has climbed to second position in the sales ranking this year after selling €1.3bn of its structured deposit range. In terms of issuance, with 46 products year to date the state-owned bank has almost doubled last year’s overall issuance of 26 products.
“We are currently studying new products to add to our current offer, although we cannot make any disclosure,” he added. “We are convinced that they will add diversity to the Portuguese market and Caixa’s client base in particular. Our goal is to satisfy investor’s demand, which is clearly growing, as the increase on the number of players and number of products denote.”
The bank is currently marketing four products – two digitals linked to the PSI20; one capped call linked to the Euribor 6-month rate and another capped call linked to the Eurostoxx50.
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