At a glance
- 10.5% p.a. conditional coupon paid if all indices above 70% of initial level on observation date
- Capital barrier at 60% of initial level — capital returned in full if barrier not breached at maturity
- Early redemption from year 1 if all indices at or above initial level on any annual observation date
- USD denominated — suitable for USD-income investors
- Minimum investment USD 25,000
How This Note Works
This autocall structured note is linked to a basket of major US equity indices — providing exposure to the broad performance of US equity markets while incorporating conditional capital protection through a defined barrier mechanism.
Conditional Coupon Structure
The note offers a conditional coupon of 10.5% per annum. This coupon is paid on any annual observation date where all indices in the basket close at or above 70% of their initial levels (the coupon barrier). If the indices are between 60% and 70% of their initial levels on an observation date, no coupon is paid for that period — but depending on the note structure, a memory feature may accumulate the deferred coupon to be paid on the next eligible date.
The conditional nature of the coupon is the key distinction from a fixed-rate bond: the 10.5% is achievable only when markets remain above the barrier level. Investors receive no coupon in years where markets fall below the threshold.
Autocall Mechanism
On each annual observation date (beginning from year 1), if all indices in the basket close at or above their initial levels, the note is automatically redeemed. The investor receives their full capital back plus the coupon for that year. The maximum term is five years — the note cannot be extended beyond this point regardless of market performance.
Early redemption is beneficial in rising market environments: an investor who achieves an autocall in year 1 receives 10.5% on their capital in approximately 12 months, allowing redeployment into the next available opportunity.
Capital Protection at Maturity
If the note is not autocalled in years 1 through 4, it proceeds to its final observation date at the end of year 5. At maturity, capital protection is determined by whether any index in the basket has breached the 60% barrier:
- If no index has fallen to or below 60% of its initial level: the investor receives 100% of capital plus the final year coupon.
- If any index has breached the 60% barrier at maturity: the investor participates in the loss of the worst-performing index, with capital returned proportionally to that index's performance. For example, if the worst index is at 45% of its initial level, the investor receives 45% of capital (a 55% capital loss).
This structure is sometimes called a "European barrier" — the barrier is checked only at maturity, not throughout the life of the note. This is meaningfully more protective than a "daily barrier" (American barrier), where a single intraday breach would trigger capital exposure regardless of subsequent recovery.
Who Should Consider This Note
This note suits investors who:
- Have a moderately constructive or neutral view on US equities over a 1–5 year horizon
- Can accept capital risk if US indices fall more than 40% and do not recover by maturity
- Are seeking returns materially above deposit rates and investment-grade bond yields
- Can commit capital for up to 5 years without needing liquidity
- Are classified as sophisticated or high-net-worth investors
It is not suitable for investors who cannot afford to lose capital, who require regular guaranteed income, or who need access to their funds within the note's term.
Key Risks
Barrier breach risk: If major US indices decline by more than 40% and fail to recover by the maturity date, investors face proportional capital loss. Historically, sustained declines of this magnitude are uncommon over 5-year periods, but they are possible — as seen during 2008–2009 and other periods of severe market dislocation.
Counterparty risk: The note is an obligation of the issuing financial institution. If the issuer becomes insolvent, investors may not receive their capital or coupon regardless of the performance of the underlying indices. Notes are issued by investment-grade financial institutions, but no issuer is without risk.
Liquidity risk: This note does not trade on an exchange. If you need to sell before maturity, you must seek a bid from the issuer or a secondary market participant. Prices prior to maturity may be significantly below par, particularly if markets have declined and/or interest rates have risen since the note was issued.
Before you act
How to Enquire
To receive the full term sheet, information memorandum, issuer details, and factsheet for this note, contact our investment team using the button above. We will confirm current availability, pricing, and minimum subscription details. This note is available to sophisticated investors and high-net-worth individuals only, subject to compliance with applicable regulations in your jurisdiction.
Many of the investments listed here cannot be held directly in a personal name. Funds, structured notes and similar instruments are typically subscribed through an account or platform capable of holding them — an international investment platform, a life assurance bond, a trust or corporate account, or a pension wrapper, depending on where you are resident and what you are seeking to achieve. Global Investments arranges and administers those structures, so that the account and the investment are dealt with together rather than separately.
Risk Disclaimer: This information is provided for general purposes only and does not constitute a personal recommendation or investment advice. The investment described carries significant risk, including the risk of losing all capital invested. Past performance is not a reliable indicator of future results. Investments may be illiquid. The value of investments and income from them can fall as well as rise. Before investing, you should consider whether this investment is appropriate for your individual circumstances and seek independent professional financial advice. Global Investments is not responsible for any investment decision made in reliance on this information.