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U.K. Thrift Ventures Into Emerging Markets

Newcastle Building Society, a U.K. thrift, has structured an investment bond linked to a European emerging market index for pension consultant firm Mattioli Woods.

Newcastle Building Society, a U.K. thrift, has structured an investment bond linked to a European emerging market index for pension consultant firm Mattioli Woods. The note is the second emerging-market-linked offering Newcastle has worked on for Mattioli Woods, the first referenced global emerging market indices. The deal it is offering now is linked to the CECEEUR, which references Czech, Hungarian and Polish indices.

The U.K. pensions market is dominated by notes linked to domestic indices, so the deal stands out. Steve Irwin, responsible for marketing at Newcastle, said Mattioli Woods' investor research showed there was demand for such a product. The consultant then approached Newcastle because it had an existing relationship with the thrift. Newcastle has hedged the note with an external counterparty, but Irwin declined comment on the size of the deal, hedge and hedge counterparty. Officials at Mattioli Woods did not respond to questions by press time.

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