Nvesta, a U.K. structured products boutique, has launched an income product based on an equity-linked medium-term note and deposit. The MTN, referenced to the FTSE100, uses a down-and-in put with a knock-in at 50% to give protection against a large fall in the index, explained Anthony Green, business development director in London. The put option will be struck at the index value on July 30.
The money not invested in the zero-coupon bond--approximately 20%--is invested in deposits which pay a fixed rate of 5% net of tax. Tax liability on the product is deferred until maturity, which means investors can use their annual capital gains tax allowance to balance the gain made on the growth part of the product.
The put counterparty is a double A rated bank, which Green declined to name.
