Royal Bank of Scotland Group Plc issued structured notes that pay a return based on swings in the Swiss franc versus the euro, regardless of what direction they’re in.
Investors in the so-called win-win notes get a coupon equal to the franc’s rise or fall against the common currency after five years, according to Kemal Bagci, a Frankfurt-based director in RBS’s equity derivatives unit. The notes pay a minimum return of 10 percent, he said.
RBS plans to issue about 20 million euros ($26 million) of the notes, which will be listed on the Frankfurt and Stuttgart stock exchanges when the subscription period closes at the end of August. The note includes a 1.5 percent fee which is incorporated into the pricing structure.
“This suits the current market conditions as you’ve seen a lot of currency speculators betting on the future of the euro, while the Swiss currency has drawn investors in who view it as a safe haven,” Bagci said. “We are mainly targeting private banks for this product.”
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