BNP Paribas has announced the launch of a new series of Step-Down Cash Collects on single shares with a potential monthly premium between 0,55% (6,6% pa) and 1,35% (16,2% pa ), Step-Down effect and three-year term. The new series of Cash Collects allows for potential premiums to be earned on monthly valuation dates even if the underlying stock has lost ground but trades at or above the barrier level (70%). These products are also characterized by the Step-Down effect: starting from the sixth month of life, in fact, the Certificates mature early and repay the nominal value if, on the monthly valuation dates, the underlying shares at a value equal to or greater than the prepayment level. The level of prepayment is equal to 100% of the initial value of the underlying for the first 6 months (from the sixth to the eleventh month of life) and then decreases by 5% every 6 months, until reaching 80% of the initial value .
If, on the other hand, the certificate reaches maturity, set for 21 December 2021, two different scenarios are possible: if the underlying trades above the barrier level, the Certificate repays the nominal value and pays the premium; if the underlying trades below the barrier level, set at 70% of the initial value, the Certificate pays an amount commensurate with the negative performance of the underlying. For example, the Step-down Cash Collect on Telecom Italia will pay a premium of 0,70% if, on each valuation date, the security is above the barrier price (€0,39) and continues its life until the date of subsequent evaluation. Starting from the sixth month, should Telecom Italia quote above the early repayment level, the Certificate will pay the premium and will also repay the capital initially invested in advance (in the example, €100 per Certificate).
Luca Comunian, Head of Distribution Marketing & Communication – Gobal Markets of BNP Paribas Corporate & Institutional Banking, commented: “Cash Collect Step Down is BNP Paribas's response to investors' requests for an early call even if the underlying lose ground. They are the result of the product innovation of BNP Paribas in a market moment in which volatility
is particularly accentuated and we have witnessed marked declines in share prices”. The tax treatment of certificates, which are considered other income of a financial nature (with a tax rate of 26%), unlike other investment classes such as funds and ETFs, allows any capital gains to be used to offset previous losses. More information on the BNP Paribas Cash Collect range is available , promising.
