UniCredit SpA (UCG), Italy’s biggest bank, sold its first structured note paying returns linked to interest-rate swaps since 2010.
UniCredit raised 25 million euros ($33 million) from selling a 15-year note on April 2 that will, at the lender’s choice, pay either a fixed rate of interest or a coupon tied to so-called constant-maturity swap rates, according to data compiled by Bloomberg. These are benchmarks that measure the cost of exchanging fixed and floating interest rates in the swap market.
The notes will initially pay an annual coupon of 6 percent, Bloomberg data show. Every three years, Milan-based UniCredit has the option of switching the interest payments to a rate linked to 20-year constant maturity swaps.
Notes linked to constant maturity swap rates allow investors to bet on the future direction of interest rates. The euro 20-year swap rate is 2.57 percent.
UniCredit’s last such issue was its 4-million euro security sold Nov. 12, 2010, Bloomberg data show.
Structured notes are bank-issued securities that combine bonds with derivatives, contracts whose value is linked to the price of stocks, interest rates, currencies or commodities.
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