Home price index-linked notes are ‘hybrid’ securities because they have characteristics of both fixed income (i.e., corporate bonds) and equity securities. They offer the principal protection of a bond as well as the potential returns, or inverse returns, of a housing market as measured by an S&P/Case-Shiller Home Price Index. The repayment of principal and interest are backed by the full faith and credit of the issuing firm. Index-linked notes typically: › Are issued by major broker-dealers via a AA-rated (or higher) entity › Mature 3 – 10 years after original issuance › Pay a single interest payment at maturity For an appreciating housing market, an investor can achieve returns that reflect those of an ownership position in a diverse portfolio of residential properties - the investment return will include a “kicker” based on the growth of the chosen S&P/Case-Shiller Home Price Index. In a depreciating housing market, upon maturity, the investor receives the bond principal - or, in the case of an inverse structure, bond principal plus the absolute percentage value decline in the chosen index.

Copyright © 2007 MacroMarkets LLC | All rights reserved.	Sitemap | Disclaimer