Bear Stearns last week kicked off a structured retail products program in Hong Kong from its newly-established onshore equity platform.
The launch is via its Bear Stearns Structured Retail Notes program, through which similar products for private clients have already been launched. "We're moving to the next phase," said Edward Ho, senior managing director in Hong Kong. Ho and a team of marketers from Merrill Lynch recently joined to set-up an equity structuring desk (DW, 4/1). The six-strong team will likely hire an additional marketer by year-end.
The firm will distribute the products through nine local banks in Hong Kong including Hang Seng Bank, Asia Commercial Bank and Bank of America.
The first deal is a two-year structure named Horizon, which offers a 10% fixed coupon after six months. The notes are linked to a basket of stocks and every six-month interval after the first six months until maturity the investor receives the higher of either a 2% buffer plus the return of the worst-performing share or zero. If a 12% aggregate coupon is reached on the 12, 18, or 24-month valuation date, the product may be redeemed. Additionally, if the target of 12% is reached on the 18 or 24-month valuation date, a bonus redemption coupon of 5 or 10% is provided. The basket is comprised of Hong Kong blue-chips including conglomerates and financial names. "The selected stocks are low-volatility shares such as HSBC and Sun Hung Kai Properties that investors are comfortable with," said Joseph Chan, managing director in Hong Kong.