UBS unveiled its "Super Notes XV" (series No. 15a and 15b), which may sound like an advert for a US football game, but is really two tranches of notes linked to the performance of eight Hong Kong-listed companies.
The notes which have a tenor of two years and a fixed coupon of 7.0% for the first year, also offer the potential for mandatory early redemption after the first 18 months as well as a potential bonus coupon of 7% upon mandatory early redemption or at maturity.
Otherwise, the potential variable coupon is linked to the best performing share in the basket subject to a maximum of 7%. The basket of stocks comprises: Bank of East Asia; Cathay Pacific Airways, Cheung Kong (Holdings); Henderson Land Development Holdings; HSBC Holdings; Hutchison Whampoa; Sun Hung Kai Properties and Swire Pacific "A".
"Super Notes XV will be attractive to investors bullish on the share price performance of the companies included in the basket over the life of the notes and who are seeking a fixed-rate coupon for the first year at a relatively high yield in the current low-interest rate environment," explains Christopher Lee, head of the equity risk management intermediary desk for UBS.
"Denominated in US dollars or Hong Kong dollars, the two tranches are designed to cater for investors seeking to pay for and receive payment in those respective currencies," added Lee.
On the maturity date - expected to be in September 2007 - the notes will be redeemed in cash at 100% of their principal amount or by delivery of shares in one of the companies, depending upon the share price performance of the companies. The notes are not principal protected. The minimum purchase amount is HK$50,000 for the Hong Kong dollar notes, and US$5,000 for the US dollar notes.
Available for subscription by retail investors in Hong Kong until 2 September, the notes are being distributed by Standard Chartered Bank (Hong Kong); Sun Hung Kai Investment Services; Wing Hang Bank and Wing Lung Bank.
