Structured Retail Products has published a report outlining the performance of the French structured product market in 2022. Some of the findings were shared with attendees at a gathering organised by the Association française des produits d’investissement de détail et de bourse (AFPDB) on February 2 in Paris.

French structured products held their own in 2022,
SRP report finds

London, 15 February 2023 - Structured Retail Products (www.structuredretailproducts.com) has published a report outlining the performance of the French structured product market in 2022. Some of the findings were shared with attendees at a gathering organised by the Association française des produits d’investissement de détail et de bourse (AFPDB) on February 2 in Paris.

SRP’s analysis for 2022 found that structured products continue to attract stable returns. Some 96% of products that matured or autocalled that year paid out a positive capital return. Just over three-quarters (78%) of products paid out 5% or more, down on the 85% seen in 2021. The average annual coupon paid out in 2022 was 6.9%, also slightly lower than the 7.7% paid out the prior year.

Autocallables, which continue to represent most of the structures issued in France, were responsible for 90% of products that have been redeemed in 2022. They returned on average 7.5% pa, against 8.1% in 2021. Over two-thirds (68%) of autocallables returned over 6% pa.

Among the underlyings that contributed to returning the highest coupon in 2022 were indexes with synthetic dividend (also known as decrement) (8.5% annualised return). It is worth noting that decrement index-linked products have shown similar early redemption call rates than products linked to a benchmark. In terms of redeemed notional, the former accounted for 17% and the latter for 39%. Products linked to benchmark indices delivered a coupon of 4.65% pa on average and products linked to single stocks returned 6%.

“Structured products redeemed in 2022 demonstrated again their capacity to deliver positive returns in a difficult year for the market, which saw major selloffs in most asset classes,” said Nikolay Nikolov, SRP product manager. “Despite some pressure on valuations of live products, our analysis showed that, for the typical index-linked structure, there was virtually no capital protection barrier breached at the markets’ low point in September [2022].”

Another key finding in SRP’s analysis is the growth in demand for capital-protected products off the back of the rise in interest rates.

While most products issued put capital at risk, the share of products with 100% capital protection was 24% of all issuance in the fourth quarter of 2022, up from just 1% in the first quarter of the year. This trend has also been seen across Europe and the US.

“Because of ongoing economic and financial circumstances, the offer of structured products has become more defensive, with for instance, more unconditional coupons, and protection barriers absorbing falls of up to 60%,” said Nikolov.

For more information of this report, please contact Product Manager Nikolay Nikolov at nikolay@structuredretailproducts.com.

 

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