“Il rise in interest rates it was a very fast movement, which surprised most investors.” The effects of the interest rate explosion are highlighted Chicco Di StasiHead of equity, credit and brokerage sales di UniCredit, which underlines how having passed extremely quickly from a scenario of zero rates to a scenario of rates at objectively high levels has led to a decisive shift in investors’ attention. “The interest in the world has returned bond and even gods structured products linked to rates and inflation. We have followed this trend, trying to satisfy market demands and creating products that offer the possibility of having a higher return than that of government bonds”.
A shift of interest, he explains, which has involved all investors, retail, high-end individual investors but also the corporate segment, in which many of the investments are focused on non-equity rate and inflation products. There is also another peculiarity of the current scenario that Di Stasi points out: all asset classes have recorded a strong increase in volatility, except forequity, whose volatility continues to remain at historically very low levels. In structured products, explains the UniCredit manager, the important components are rates and volatility: in the current context, high rates give the possibility of having a higher premium, but at the same time the very low volatility on the stock market reduces the value of the optional component. “In this context, equity is the asset class that has suffered the most and continues to suffer.”
On the front of the fixed incomeHowever, the “competition” of BTPs has produced various changes in the offer. “There was a lot of innovation in terms of placement methods and a lot of creativity on the part of issuers to offer products that were attractive in a context where government bond yields were particularly high,” confirms Di Stasi. In terms of placement methods, like other issuers, UniCredit has decided to also focus heavily on the secondary market; in terms of products, compared to system issues such as those of Eni, Cdp or Btp Valore which offered simple payoffs, with fixed coupons for 5 or 6 years, underlines Di Stasi, a peculiarity of UniCredit was that of offering more differentiated, such as cumulative callable and fixed to floater. “We have the possibility of issuing on a more recurring basis, so we can make issues of limited size with different payoffs, in order to satisfy the demand of different customers. The innovation that has always characterized the equity part is now also used on the bond segment”.
In particular on primary market, explains Di Stasi, products have been issued to capture, in addition to the rise in rates, also the volatility of the underlyings with products linked to the Euribor or to European or Italian inflation, or of the range accrual type. “These are asset classes that have not been included in capital protected certificates for several years,” he underlines, recalling how with the rise in rates even the Credit linked notes, a product that has almost disappeared, characterized by a profile very similar to that of a bond but which offers the possibility of having a slightly higher yield. “Although we place the products directly on the secondary market, in UniCredit”, assures Di Stasi, “we pay the utmost attention to the needs of customers and the questions coming from the network, trying to configure solutions that meet the requests as much as possible. They have been developed tools for which the individual investor together with the advisor can build the profile of his investment, from the maturity to the type of coupons, from the underlying to the barrier model”.
But the interest in UniCredit bonds and certificates on the secondary market often comes from clients with a high profile, if not institutional investors, investors who inform themselves independently about their investments. “To spread knowledge about the different solutions we do a lot of training activities, around 15 webinars a month, educational tours throughout Italy in which we explain how the products work, without giving investment advice because it’s not our job, we are, so say, the product technicians, our job is to make them known.”
Finally, rates are destined to fall but UniCredit believes that interest in products linked to rates will not decline. “In the next 6 – 12 months there will continue to be strong interest in interest rate products and we are already thinking about solutions that can allow the customer to obtain value even in a context of rate reduction,” assures Di Stasi.