I have been offered, just this morning, very limited access to the latest tranche of an Autocallable Bond investment from Global Reach (www.globalreach.ie). I have a lot of confidence in this particular bond, and previous clients experience with this provider and product has been extremely positive. This is the second tranche as the firsts one sold within four days of opening. This tranche is for €1million, launched last Friday to catch the over spill from the previous tranche and it is 80% filled straight away. It is closing next Monday but likely to be full well before that date. Autocallables have been very popular with our clients and work as follows.
1) Coupon: 14% annual coupon. This will be paid if all 3 indices are equal or greater than strike price (next Monday) at any annual anniversary date.
2) Invests 33% in each of the following Indices: DJ EuroStoxx 50, DJUBS Commodity Index, Heng Seng China Enterprise Index.
3) Capital Protection: 100% Guarantee once the indices don’t fall below 50% soft protection barrier. (ie unless any index breaches 50% of the purchase price clients funds are 100% secured by Bank of America/Merrill Lynch – Last time it was Citi Bank).
4) If it doesn’t call in year one, it rolls on to year two and the coupon is cumulative, ie 28% in year 2, and so on for 5 years.
The history so far on Autocallables with Global Reach is:
1) Issued Nov 2008 (25% Coupon) - Paid out First year
2) Issued April 2009 (20% Coupon) – Currently bid 118cent on secondary market, Likely to pay out next month
3) Issued May 2009 (18% Coupon) - Currently bid 110 cent ( 100cent = par). Looks likely to pay in May.
4) 2 Autocallables issued since Sept 2009 – to early to tell – but heading the right direction.
If you are interested in finding out more can you let me know today or tomorrow so I can reserve a slot before it sells out.
- Warnings: The underlying structure means that if you wish to encash your investment before the anniversary or Maturity Date, you may lose some or all of the money you invested.
- Warning: The value of your investment may go down as well as up. If you invest in this product you may lose some or all of the money invested.
- Warning: Past performance of these indices is not a reliable guide to future performance.
- Warning: This document is based on our understanding of current revenue law and practice which is subject for change without notice.
- Warning: The value of investments may fall as well as rise and your attention is specifically drawn to the section ‘Risk Factors’ in this document and in the Base Prospectus. Prospective investors should be able to bear the economic risk of an equity investment and be able to withstand a total loss of some or all of their equity. This product is not guaranteed in certain circumstances and some or all of your capital may be lost.
