Time deposit / reverse convertible bond combination on Bayer, Siemens and AXA – columns

Time deposit / reverse convertible bond combination on Bayer, Siemens and AXA

With Duo Yield Bonds on equities, investors can generate returns above the inflation rate with the lowest possible risk in what is sure to be a prolonged slump in interest rates. Duo Yield Share Bonds is a combination of a short-term time deposit and a share bond.

The new duo yield bonds with terms of 2.5 years on the Siemens (ISIN: DE000LB2TRH8) and AXA shares (ISIN: DE000LB2TRH8) come with safety buffers of 15 percent and interest coupons of 2.00 and 2.30 Percent equipped. Using the example of the bond on Bayer shares (ISIN: DE000LB2TRG0), which even has a 20 percent safety buffer, the functionality of this type of bond should be illustrated. The bonds can be subscribed until December 17th, 2020.

50% repayment after 6 months

The closing price of Bayer shares on December 17, 2020 is set as the starting value for the Duo Yield Bond. The base price will be at 80 percent of the starting value. With an assumed Daimler starting value of 47 euros, the base price is calculated at 37.60 euros.

Regardless of the share price development, investors will receive interest income of 2.60 percent per year on June 23, 21. In addition, half of the capital employed is repaid on this day.

After the remaining two years of the term, investors will receive an interest payment of 2.60 percent per year on the interest payment days (23.6.22 and 22.6.23) for the nominal value, which has now been reduced to EUR 500.

If the share is quoted on the final valuation day (6/16/23) at or above the base price of 80 percent of the starting value, the bond will be repaid with the reduced partial amount of 500 euros. If the share price is below the strike price on that day, the bond will be issued by delivering Bayer shares.

The number of shares to be delivered is calculated by dividing the reduced partial amount by the base price. Assuming a base price of 37.60 euros, investors will receive (500: 37.60) = 13.29788 Bayer shares, with the equivalent of the fractions being credited.

CertificateReport Conclusion: With the new duo-yield bonds on Bayer, Siemens and AXA shares, investors can achieve annual gross returns of up to 15 or 20 percent for the shares in the next 2.50 years Generate 2.60 percent.


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