Deutsche Bank is increasingly looking at foreign currencies for its structured products in Belgium. The bank currently has six products open for subscription, including two structures denominated in Swedish krona and one in Australian dollars.
The two Swedish krona products, the eight-year Fund Opportunity Coupon SEK 2025, which is linked to Deutsche Concept Kaldemorgen, and the five-year Eurostoxx 50-linked Europe Memory Coupon SEK 2022, are issued by Natixis and the bank's investment banking branch, Deutsche Bank AG, respectively, while the Australian dollar product, Fund Opportunity Coupon AUD 2023 - also issued by Natixis - is linked to the Deutsche Invest I Top Dividend investment fund.
"There are a number of large maturities in Swedish krona in this period," said Christophe Blontia (pictured), senior product manager at Deutsche Bank in Brussels. "Then there is the fact that we are very positive about the SEK, also with a view to its outlook compared to euros. That's why we have launched two structured products in Swedish krona, each with different maturities, different issuers and different underlyings, to be able to offer our clients a choice of reinvestment alternative, but both with 100% redemption of the nominal value in SEK."
Upcoming SEK maturities relate to fixed-rate bonds launched at a time when interest rates were much higher, according to Blontia. "At the moment, it is, of course, very difficult to issue a fixed-income product due to low rates, so the opportunity cost is low," said Blontia. "That's why we have opted for structured products, which offer a higher coupon, albeit with a little bit more risk, but with potentially a higher return."
The choice of Australian dollars is also due to upcoming maturities, according to Blontia. "There are a number of investors in Australian dollars who continue to invest in the currency and, because there is now a product which is about to mature, we want to offer them an alternative reinvestment," he said. "Our clients have the choice between a number of fixed-rate bonds on the secondary market and our structured solution in Australian dollars for those who wish to take a little bit more risk, with a minimum coupon and a higher potential on the upside when it comes to the coupon."
Deutsche has distributed 16 structured products in Belgium in 2017, and, where in the past the majority of the bank's products were linked to funds, its emphasis has shifted to equities, with eight of its products linked to a single index, five to a fund and three to interest rates. "For clients who want to invest in equity with a certain protection, because we're talking here mainly about capital protected products, we offer more equity-linked products than last year, also in relation to our strategy on equities," said Blontia.
The bank has introduced a new equity-linked product, the protected autocallable note, which can be redeemed early with a high coupon when the underlying equity index reaches a certain threshold, according to Blontia. "This product has been very successful," he said. "In general, products with 100% capital protection in euros sell best. Fund-linked products are traditionally very popular, but there is also a strong appetite for equity-linked products."
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