Calyon has launched a short-dated callable equity-linked note in Hong Kong, where retail investors are seeking shorter-term risk. "Investors are still bullish in the short-term and are willing to be aggressive and accept higher risk," said Dickson Cheung, managing director and head of equity derivative sales and marketing in Hong Kong.
Dubbed Calyon Fortune Notes Series 12, the notes are linked to four large-cap locally-listed stocks including Sinopec and China Life, with maximum maturity of 10 months. "We're still bullish in the six-to-nine month term but after that the outlook is less certain," noted Cheung. On the short end of the curve, retail products usually start around one-year and he noted this was the French house's shortest maturity deal to date.
A guaranteed coupon of 2.6% is paid after two months and potential coupons of the same amount can be received every following two months if all four stocks trade above 85% of the initial spot level. If on those observation dates all the stocks are priced above 95% of their initial value, the notes will be called early and the investor will receive 100% of their investment plus the coupons. The structure is not principal protected, so the investor will receive the least performing share if at maturity the stocks are not above the strike price. The offering closes early next month and is being sold through local banks.
