With these new products, RBS now offers UK investors the opportunity to benefit from a range of income opportunities that can be bought in units as small as £100. Firstly, the 'Step-Up Bond' is a bond that will pay a rising rate of interest from 3.30%p.a. to 8.55%p.a. and is listed on the LSE's Retail Bond Market. The second product is the UK 10.50% Autocall, which can pay 10.50% p.a. depending on the performance of the FTSE 100 Index.
Commenting on the Step-Up Bond (Product code RBSU), Ben Board, UK Director of UK Listed Products says: "Traditionally, bonds pay a fixed coupon each year. The Step-Up Bond allows investors to secure a quarterly coupon payment that increases by a rising amount each year until the bond matures. So, if you're concerned about inflation or rising interest rates over the next seven years, the Bond offers a very simple solution that allows you to lock in an annually increasing income." The Step-Up Bond has a term of seven years.
The UK 10.50% Autocall (Product code RS29)provides an opportunity to make a potential return equivalent to 10.50% (gross) per year if the FTSE 100 Index is at or above its initial level on specific annual observation dates (the first being after two years at the end of January 2013) or at maturity.
Both the Step-Up Bond and the 10.50% Autocall will be listed on the London Stock Exchange on 17 January 2011 for purchase through stockbrokers and wealth managers. Please visit www.rbs.co.uk/markets for more detailed information on the products.
Investors must be aware that these products are comparable to a loan to the issuer. In the unlikely event that RBS defaults or becomes insolvent, investors may lose some or all of their investment. These three products are not covered by the UK Financial Services Compensation Scheme. Investors could get back significantly less than their initial investment when selling the products before their maturity.
Inflation will affect the real value of any return on your investment. In addition, in the case of the UK 10.50 Autocall investors will lose some or all of their capital if the FTSE 100 Index on the final annual observation date in January 2017 is less than 50% of the starting level.
