Structured Notes for the Income Investor
2 New Structured Notes for the Income Investor – up to 10%pa paid quarterly
With interest rates so low on conventional bank deposit investments, and with the fear of inflation resulting in Central Banks around the world to increase official rates (though they will still be at very low levels) which is generally perceived to be a negative for the fixed interest / bond markets, many investors are now looking more towards alternative investments to help diversify their portfolios and generate some investment income.
We are pleased to announce that we have 2 new additions to our range of Structured Notes that has a focus on regular income payments. All of the Structured Notes on offer have a Capital Protection feature to reduce the chance of capital loss.
The 2 new Notes are issued by BBVA (Banco Bilbao Vizcaya Argentaria) who carry a credit rating of A from Standard & Poors (A3 from Moody’s and A- from Fitch).
10.00%pa Income Coupon (9.00% for GBP investors) – Global Enhanced Income Note
This particular note is structured using the Hang Seng Index, CAC 40 Index, FTSE MIB Index and the iShares MSCI Brazil ETF with a Strike Date of 25th March 2022.
How does the Note work….??
This Note has a 6 year maximum term, and each quarter, there will be an observation date (27th June, 26th September & 28th December for 2022) and if the above indices are at least 80% of their initial price (i.e. have not fallen more than 20%), then the investors will receive a quarterly coupon of 2.5% (2.25% for GBP investors).
If 1 of the indices has fallen more than 20% at an observation date, then no coupon payment will be made.
However, this Note has a ‘memory feature’ so if at a future observation date all indices are at 80% or above the initial level, the Note will pay the due income coupon PLUS all missed coupons.
The Note can also mature early. From the end of Year 1 onwards, if all of the indices are at or ABOVE their initial level, the Note will mature with the investor receiving 100% of their capital PLUS the income coupons due for the period the Note had been held.
Please note that Capital is at risk if any of the underlying indices close below the Protection Barrier of 65% of the initial level (so a drop of more than 35% at the maturity date). If this was to occur, the investor would receive the invested capital decreased by the performance of the worst performing underlying index, resulting in a partial loss of their invested capital.
This Note is an attractive option for clients that are looking for an income investment that also has a capital protection feature.
6.75%pa Income Coupon (6.20% for GBP investors) – Developed Markets Income Note
The second Note issued by BBVA is along similar lines to the previous note, but is based on the Eurostoxx 50 Index, CAC 40 Index, Nikkei 225 Index and the Nasdaq 100 Stock Index.
Historically, the above indices have exhibited a lower level of volatility than the indices in the previously mentioned Note and would be regarded as a lower risk proposition. As such, the income coupon reflects the lower level of risk.
As with the previous Note, it has a maximum 6 year term but with a 6 monthly coupon observation date (26th September 2022 would be the first). If the above indices are at a level of at least 85% of their initial level (so a drop of no more than 15%), a coupon of 3.375% (3.10% for GBP) would be paid.
Same as the previous Note, it has a coupon memory feature which ensures that if an index is below the 85% level at an observation date, if at a subsequent future observation date it is at or above the 85% level, the investor gets the half yearly coupon PLUS any previously missed coupons.
The Note can also mature early. From the end of Year 1 onwards, if all of the indices are at or ABOVE their initial level, the Note will mature with the investor receiving 100% of their capital PLUS the income coupons due for the period the Note had been held.
Please note that Capital is at risk if any of the underlying indices close below the Protection Barrier of 65% of the initial level (so a drop of more than 35% at the maturity date). If this was to occur, the investor would receive the invested capital decreased by the performance of the worst performing underlying index, resulting in a partial loss of their invested capital.
Both of the above BBVA Structure Notes can be invested in up to the closing date of 25th March 2022 through most of the major Offshore Life Companies and Direct Platforms
As an additional bonus for our investors, anyone that invests in a Structured Note offered through Ethical Offshore Investments will be entitled to a minimum 1% rebate on the invested amount (as part of our full disclosure to clients, we would receive a commission payment from the Structured Note promoter, of which we would share that commission with our clients).
For information on the other Structured Notes currently available, please click HERE
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