They are the structured investment instruments, which combine the characteristics of “classic” bonds with the inserted derivative.
Raiffeisenbank offers both publicly traded shares and private shares, which are intended specifically for a close group of investors. Currently offered certificates for common clients are introduced in section Raiffeisen Group emise. They arise on the grounds of the collaboration between Raiffeisenbank and Raiffeisen Centrobank. Raiffeisen Centrobank has deep experience in terms of certificates and it is also a holder of lots of awards for creation of these products in Central and East Europe. Clients have a possibility to buy publicly traded certificates both on OTC market (the interbank market) and on the stock exchange – Viennese, German or Prague stock exchanges. Certificates are issued in various currencies, for example in CZK, EUR, HUF, PLN, and USD.
Raiffeisenbank offers a possibility of creation of one´s own certificates within the private emission. In this case, it is essential to cover the minimum volume of the transaction which is in millions EUR. It always depends on the exact type of the certificate. The most used underlying assets for certificates are share indices, shares, share baskets, commodities and exchange rates. Certificates enable to participate in both the growth of the underlying asset and its slump.
The bank offer contains: Bonus Certificates, Discount Certificates, Express Certificates, Factor Certificates, Guaranteed Certificates, Index Certificates, Convertible Bonds, Turbo Certificates and Warranties.
They can be divided into leverage and non-leverage products. Everyone has his own most suitable product according to his experience and the demanded yield. Some certificates are issued with the open end maturity. The most frequently used certificates are certificates with a predetermined maturity date.
Before choosing the appropriate certificate, every investor has to go through the details of its functionality (every certificate is suitable for a different investment strategy) and primarily risks connected with the certificate. Every certificate contains also the risk of the issuer. It is a debt security!
It is a type of the investment instrument that belongs to the leverage products group. The most of turbo certificates are issued with an open end maturity with the fact that it has a predetermined size of lever.
If the underlying asset, for example a share, appreciates of 1%, then the bought turbo certificate with lever 3x causes the growth of the yield of 3%. In the opposite case, it leads to a 3% loss. The size of the lever does not have to be constant but it can change according to the development of the underlying asset. Conditions such as Knock- out and Knock – in barriers can be the part of the turbo certificates.
Certificates are used by investors who demand high yields, accept risk and do not want to (or do not have the possibility) to buy the underlying asset. Thanks to emission ratio, turbo certificates cost much less. Furthermore, they are used by clients who do not want to buy securities on credit (margin). It is a type of the instrument that belongs to the leverage products group.
It is a really high-risk product intended for very experienced investors.
They are mostly option instruments traded on the stock exchange. Most of them are issued for a predefined period, usually 6 – 24 months. Warrants are a different form of option, which means that they guarantee the right to buy/sell the predefined underlying asset. They have a possibility of cash settlement or the delivery of the underlying asset. They are used as a form of hedging or as a speculation. In most cases, they are leverage products. It means that they offer a possibility either of high yield or huge loss.
The bank offers two variants:
Call Warrant: a speculation on the growth of the underlying asset
Put Warrant: a speculation on the fall of the underlying asset
Like options, warranties are sold for a fraction of the price of the underlying asset. (Emission ratio could be: 1:10, 1:100, 1:1000 / 0,1; 0,01; 0,001). Thanks to this, their price is much more volatile. Their current value is determined by the bank or the stock exchange in according to emission conditions. The price is influenced by the current price of underlying, the strike price, maturity, the emission ratio, the market interest rate and the volatility of the underlying asset.
Warranties have a predetermined strike price, at which it is possible to apply one´s right to buy/sell.
Other types include for example knock out or knock in condition (there is a barrier and in case of its achievement, the warrant vanishes or just arises.)
Due to the fact above, that it is a really high-risk instrument, it is recommended only to very experienced investors.