The first In Brief of 2023 contains a mixture of products, people moves and legislation.
Marex Solutions issued a new structured product linked to the performance of the Coinbase (COIN) share.
The six-month barrier reverse convertible (BRC) note offers a guaranteed 40% coupon p.a. paid monthly. The autocallable structure includes a predefined downside barrier at 66% of the stock's price listed on the Nasdaq exchange - US$37.8 on the issue date (4 January) and will mature early paying the initial capital plus the coupon at any observation date if the underlying value is above the strike price.
The product will repay the capital invested at maturity as long as the shares of the cryptocurrency exchange platform stay above US$25 during the six-month term. If the downside barrier is breached, investors will be allocated Coinbase shares at US$25, and participate 1:1 with the share’s performance.
In other crypto-related news, DeFi protocol Pods raised US$5.6m in seed funding to create structured products for crypto-assets. The financing round featured investors such as IOSG, Tomahawk, Republic, Framework Ventures, and others.
The first strategy on Pods Yield is stETHvv (Ethereum Volatility Vault), a low-risk product focused on Ether accumulation which combines Lido’s yield with weekly strangles to earn more every time the Ether price bounces up or down.
There is massively higher demand on principal-protected structures - Jung-Jin Yoon, Société Générale
Nicola Francia, head of Private Investor Products (PIP) & Southern Europe coverage at Unicredit in Milan has joined the Unicredit’s Group Investment Strategy (GIS) division in a senior position.
During the last eight years at Unicredit, Francia has held several senior roles within the bank’s structured products business including head of private investor products (PIP) Italy, head of PIP external network Italy and public distribution Italy & France, and head of external network and public distribution of private investors products (PIP) Italy.
Over in Belgium, the latest figures of the Belgian Structured Investment Products Association (Belsipa) show that structured products sold €570m (US$608.6m) on the primary market during the third quarter of 2022, an increase of 15% compared to the previous quarter and up 47% year-on-year (YoY).
One hundred and seventeen new products – almost exclusively structured notes – were issued in the quarter, marking an increase of 225% YoY. The heavy increase in issuance started in Q2, when 130 new products were launched, and can mainly be attributed to private placements from an undisclosed French investment bank, according to a source close to the market.
In our November overview of the US market, SRP highlighted Citi as the only issuer with sales topping US$1 billion during the month while investor demand for capital protection and structures on single indices continued to increase.
Meanwhile, FVC’s Tim Mortimer analysed the performance of products linked to the US big tech stocks which have faced headwinds in 2022 after helping drive the US stock markets and the economy in 2021
Also in the US, a bill to streamline regulatory paperwork for registered index-linked annuities (Rilas) approved by the US Senate on 6 December is now waiting a vote in the House of Congress.
Once the bill is passed, the SEC will have 180 days to create a new registration form customised to the needs of Rilas. The new tailored template will take into account the sophistication of people who purchase these products, the complexity of the products themselves, and the information available to issuers in determining what information to require.
Finally, in Apac, Société Générale has seen increased demand for income payoffs with downside protection as it expects a renewed push for hybrid asset principal protected notes in 2023.
According to Jung-Jin Yoon, head of global markets cross asset sales, Asia Pacific (Apac) at the French bank, as rates pick up, the sentiment in the equities market has been fragile triggering a return to basics shift.
“There is massively higher demand on principal-protected structures. I don't think there has been any blockbuster new products in the market. It has been a return to basics,” he said.
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