Newcastle Building Society will look to hedge its latest FTSE-linked issue in January. Steve Irwin, head of savings, said the U.K. thrift will look to hedge its multi-year FTSE trackers nearer to their Jan. 19 close date. He declined comment on the counterparties Newcastle is considering, and on the firms it consulted when structuring the deal.
The latest offering from Newcastle combines income and growth payouts and is available with three different maturities. In the structures, 50% of assets are invested in a one-year fixed-rate bond, and the other 50% are invested in a FTSE-linked call option for either one, three or five years. The one-year deal offers 5.5% income and 50% FTSE upside, the three-year offers 6.25% for the first year and 60% FTSE upside and the five-year offers 7% and 70% of the FTSE's growth.
Irwin said the decision to offer a range of tenors came out of discussions with sales officials at the firm. "We want to give our customers a choice," he added. Newcastle wanted to offer more hybrid growth and income products because they have been popular before (DW, 9/10/04), but Irwin said it also wanted to offer shorter-dated deals because the thrift has found it has some investors who don't want to lock their investments into longer-dated products.
