The Perks of Investing in Autocallable Notes

Written by Ophélie Diss

A Structured Note can be diversified in an infinite number of ways within a single package. One of the most common features of NEBA’s Structured Notes is called the Autocall.

It is a feature that allows the investment to automatically mature prior to the scheduled maturity date if the underlying asset(s) is at or higher than its initial level at any observation point.

To further understand how this Autocall feature works, you can check out an article written on this subject:  https://nebablog.com/2018/04/05/why-invest-in-autocall-structured-products/

At NEBA, we built almost all our Notes with this Autocall feature as we think it enables the investors the opportunity to use the stronger pricing/structuring of a long-term product (thanks to a 100% Coupon Trigger), but have the potential to reinvest the clients’ money in a shorter amount of time. This will keep the client portfolio current to today’s market conditions.

I have reviewed NEBA’s Structured Notes that autocalled early and here’s what I found:

For USD Structured Notes, the investor received on average 14.5% coupon for a period of 16 months. So it represents a return of 10.875% per annum. The statistics are very similar for the Notes in GBP.

A few years ago, we built this Note because we believed there was an opportunity for these Underlyings to reach the 100% coupon trigger.

And, Indeed, this Note autocalled earning the client 59.125% (GBP) / 66% (USD) / 48.125% (EUR) in 32 Months. This represents a 24.75% (USD) / 22.2% (GBP) / 18.1% (EUR) return p.a.!!

jpg11

All in all, if a Structured Note is built with Underlyings that have a higher chance of upwards movement and a 100% coupon trigger with memory, the investor can earn higher returns in a shorter amount of time than a Note featuring a lower coupon trigger.

We’re always looking for opportunistic Notes and analysing promising Indices/Equities. Let us know if you’d be interesting in such structure.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s