Structured Products (SP’s) are investments that derive their value based on the return of one or more securities. They can be linked to an individual equity, index, interest rate, or commodity (including a basket or combination thereof). They can be issued in the form of a Euroclearable/DTC eligible medium term note (MTN), certificate of deposit, or warrant. They are typically packaged and sold as MTN’s issued from a debt shelf, are Senior Unsecured Debt Obligations, and carry the same credit rating as the issuer. Each note is issued with a unique CUSIP/ISIN to facilitate the settlement process
Examples of Structured Products are:
- Equity linked.
- Commodity linked.
- Interest rate linked.
- Principal protected.
Structured products offer an enhanced level of flexibility and customization that make them an attractive alternative for many reasons. They can be tailored to provide specific levels of exposure, coupons, risk, yield, and protection to match a client’s market view and risk tolerance.
Some of the principal characteristics of Structured Products are:
- Can enhance portfolios by reducing volatility, adding principal protection and increasing income.
- With the use of leverage can increase yields.
- Allow for leveraged participation, either bullish or bearish, depending on market viewpoint.
- Can provide for enhanced income through a regular cashflow stream when compared to traditional fixed income products.
- Can be tailored to meet the special investment needs of our clients.
Structured Products are not suitable for all investors as they may involve substantial risk or loss.
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