HALISTER1: Buy ‘Triple or Quit’ EUR Notes to Sell Rich Vega: Commerzbank

Buy ‘Triple or Quit’ EUR Notes to Sell Rich Vega: Commerzbank

(Bloomberg) -- Enhance coupon income by selling rich EUR vega optionality, especially with prospects of IRS trading within a relatively tight range at low levels, Commerzbank strategist Markus Koch writes in client note.
  • Buy “Triple or Quit” EUR note with current coupon of 2.59% p.a. for 20y term
    • At the end of year 3, issuer is entitled to either prepay the note in 2019 or tender EU2m of notional on top of the initial issuance amount at that date, with EU1m as regular/minimum lot
    • For investors who can plan part of their investment needs in advance, this offers an attractive opportunity to benefit from selling optionality
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Markus Koch (Commerzbank AG)

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