UniCredit launches a new issue of investment certificates on the EuroTLX market of Borsa Italiana, taking advantage of the current context of high volatility and the decline in the stock market. It is three Step-Down Cash Collect Worst of with a memory effect and a two-year duration, an evolution of the normal Cash Collects that brings together various elements sought after by investors and which blend well with the current market context. First of all, the underlyings which are fairly defensive thematic baskets composed of four underlyings each.
Another distinctive element, the 50% deep maturity barrier allows a greater resilience of these products to any phases of volatility that could still characterize the market. In fact, the verification of the level of the underlyings with respect to the barrier for the payment of the principal at maturity is carried out only at the maturity of the product. Furthermore, these certificates boast thememory effect which allows you to subsequently recover the unpaid coupons and theautocallability. The latter is the characteristic such that the product expires in advance under certain conditions, returning the capital plus the final coupon and any previously unpaid coupons. But theeffetto Step-Down adds another feature: the trigger level for early redemption decreases over time, making early redemption more likely. An element that, in the current situation of uncertainty on the markets, can prove to be very functional.
How do they work?
Cash Collect Worst Of certificates with memory effect allow investors to receive quarterly premiums from 1.7% to 5.9% (depending on the instrument) in the event that the value of the underlying stock with the worst performance within the basket (Worst Of characteristic), on the observation dates, has a value equal to or greater than the level of the barrier, set for this issue at 50% of the initial value. Thanks to the memory effect, any unpaid premiums are not lost but will be paid later if, on one of the subsequent observation dates, the condition of the coupon event is satisfied.
Furthermore, starting from September 2022, in the event that the value of the underlying stock with the worst performance within the basket reaches a value (trigger level) equal to or higher than the initial one, the certificates are repaid early, with a total reimbursement amount equal to the nominal value (of 100 euros) plus the premium. This new issue also includes the Step Down feature, which facilitates early redemption: every two observation dates, in fact, the trigger threshold for automatic early maturity is lowered by 10%. The first threshold will therefore be equal to 100%, which will gradually lower until reaching 80% of the initial value on the observation dates of September and December 2023.
If the certificate has not been redeemed early, at maturity (March 21, 2024) two scenarios are possible. If the worst performing underlying stock in the basket has a value equal to or above the barrier, the certificate redeems 100 euros in addition to the premium and any previously unpaid premiums. Otherwise, if the stock of the worst performing basket is below the barrier, the certificate will redeem an amount proportional to the performance of the worst performing underlying. In this case, the certificate does not protect the invested capital and the investor will be exposed to the risk of even total loss of the invested capital.
You can get product information updated in real time on the site www.investimenti.unicredit.it