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The
Win Note from BNP Paribas is one of the few income products from a very
strong issuer that offers 100% capital protection and the chance of a
high coupon payment (yearly distribution).
This
is not a packaged investment product. It is a financial instrument
called a Medium Term Note (MTN), which is an irrevocable bank guarantee
to pay a certain amount at specified times when a specific event occurs.
In
this case, income of 15.75% net per annum is guaranteed to be paid if
the
basket of 20 blue chip shares do not fall below 75% of issue price at
any time during each year.
In
the tenth year, if all stocks remain above this level then all coupons
that were not paid in the previous years will also be paid.
Guarantee:
The
key to comparing guaranteed products are: the wording of the guarantee;
the likelihood of the target outcome and the credit rating of the issuer
of the guarantee.
-
the lower the credit rating of the issuer then the less cost to purchase
and the less value to the investor since the likelihood of the issuer
failing is higher
-
the higher the rating then the less chance of the organisation failing
and not being able to honour its debt, therefore the greater the cost to
purchase & the more comfort/value to the investor
BNP
Paribas
-
approx. 77,000 employees in 83 countries
-
assets/deposits of 1,348 billion Euros
-
market capitalisation of 45.1 billion Euros
-
excellent credit rating from the three major worldwide credit
ratings agencies: Aa2/AA-/AA from Moody's, Standard &
Poor's and Fitch respectively.
Best
Value
Importantly,
you are going directly to the issuer - a preserve of usually only
institutional investors and very high net worth clients.
Normally,
this would pose a couple of problems for private investors:
-
very high minimum investment and holding
-
lack of liquidity
-
cannot be held directly by an investor (needs a custody account)
In
this case:
-
BNP Paribas are offering a secondary market so liquidity is not an
issue.
-
You may purchase within your custody
account with your bank or Personalised Portfolio Bond from 250,000
USD minimum
-
Or use the preferred route and buy from 50,000 USD within Reserve
Our
View
We
are very keen on the: clear, irrevocable, quality guarantee; excellent
chance of high coupon payment and ability to achieve maximum performance
without any need for equity market growth.
We
rate this product as suitable for no risk or low risk investors and
other risk rated investors looking to balance their portfolio.
Purchasing
now whilst markets are low certainly places you in a good starting
position and removes your reliance on market growth for investment
performance.
The
wrapper feature of Reserve
allows growth investors to easily & cost effectively, re-invest distributions into other funds.
Please
note:
Income
investors do need to keep some money aside to provide for income during
any years that the Note does not distribute.
The
final details of the Win Win MTN will not be known until the bond is placed
(i.e. exact basket of final shares, exact coupon) and there is some
likelihood of variance from the description, however, the placement
company PCP Int'l do receive a small portion of the coupon payment
whenever this is distributed, so it is in their best interest to ensure
the best terms for the MTN.
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