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This website is intended for residents of Bulgaria only. In other jurisdictions, the provision of such information may be restricted by law. The information on this site is not intended for persons or entities residing, located or incorporated in jurisdictions that restrict the distribution of such materials.
What are structured products?
Certificates/notes are financial instruments resembling bonds, where the issuer undertakes the commitment to pay the entire or partial face value of the product, plus a potential return, provided that pre-determined conditions are met on a specific date in the future. They can be structured on the basis of various financial instruments, allowing for a return linked to the performance of the underlying asset.
Certificates/notes are complex financial instruments that can provide opportunities for higher return, but are also associated with a higher risk level.
The certificate issues are denominated in EUR or USD with a fixed maturity date and partial or full principal protection under the terms of an initial public offering with a fixed subscription period.
Characteristics of the structured products
Principal protection
Icon- Full – 100% of the investment is guaranteed
- Partial – a certain part of the principal is guaranteed, while the rest may be at risk
- No protection – where the entire principal is exposed to market risk
Return
IconDepending on the specific structure of the product, the following may be charged and paid:
- Fixed periodic payments
- Return depending on the underlying asset performance
- Additional return payable at the maturity of the product.
Term
IconThe certificates are suitable for different investment horizons:
- Short-term products – up to 1 year:
- Medium-term products – from 1 to 3 years:
- Long term products
Underlying assets
IconThe underlying asset may vary in the structure of each product, for example:
-
interest rate indices (Euribor, SOFR, ESTR, etc.)
-
stock indices (EURO STOXX 50, S&P 500, MSCI World, etc.)
-
commodities (gold, oil, carbon emissions (EUAs), etc.)
-
currency pairs
-
company stocks
-
credit spreads or CDS indices
-
asset baskets, etc.
Liquidity
IconThe certificates have a secondary market provided by the product creator or distributor. If liquidity is needed, you may sell your investment, while the pricing will be determined as quotation on the respective trading venue on the day of is placement of the order.
Risks
The risks associated with investments in certificates/notes vary depending on the parameters of the specific structure and may include:
- Credit risk – risk of issuer insolvency (certificates are not guaranteed by the BDIF)
- Capital risk – if the principal is not 100% protected
- Liquidity risk – if the repurchase price before maturity is not fixed
- Market risk – return may depend on the performance of the underlying asset
- Currency risk – if the certificate is in a foreign currency
- Tax risk – from withholding tax depending on the investor or changes in tax treatment. The Bank does not provide tax advice.
- Complexity risk – products may contain complex payout mechanisms and conditionalities that are not always easy for the investor to understand
What structured products can we create?
More information
Each issue of structured products has its own ISIN number and is generated by the issuer on the grounds of an approved base prospectus.
The base prospectuses drawn up by UniCredit S.p.A. are approved by the Commission de Surveillance du Secteur Financier (CSSF), Luxemburg, and those issued by UniCredit Bank AG - by The Federal Financial Services Authority (BaFin), Germany.
For each issue of a specific structured product with an ISIN that will be offered in Bulgaria, the relevant key information document will be published in Bulgarian on the website www.onemarkets.bg, where information and all documents related to the respective products are available.
In its capacity as Investment Intermediary, UniCredit Bulbank AD applies an Execution Only customer service model. This model implies that orders for purchase and sale of financial products with passporting in the EU are accepted for execution, without charging an additional premium.
The Key Investor Information Document valid for all countries where a structured financial product is offered, specifies the collection of an additional premium, apart from the nominal value premium - agio.
In view of the model of offering a structured product in Bulgaria specified above, UniCredit Bulbank AD does not collect an additional premium, apart from the nominal value premium - agio.
* The above information is for illustrative purposes only and does not constitute advice for transactions with financial instruments. It is deemed that each investor makes its own decision to invest or make other transactions with structured products. UniCredit Bulbank AD does not provide investment advice.
