Reverse Convertibles

What are these sophisticated investment instruments?
Reverse convertible securities are unsecured short-term notes of the issuing company that are linked to the price of an underlying stock. Usually this security comes with a high coupon that can be around 7.5% to 25% then investors at maturity shall receive the interest payment plus either 100% of his original investment amount or a predetermined number of shares of the underlying stock.

These bearing notes are designed to provide an enhanced yield while maintaining certain equity like risks. It’s important to understand that the value is derived from the underlying equity exposure, paid in the form of fixed coupons. Reverse convertibles are linked to a single stock in most cases.

Financial Pacific offers these sophisticated investment vehicles, however, we encourage investors to review our available research so they understand the risk involve.

Understanding Reverse Convertibles Risks
These investment instruments do not guarantee return of principal at maturity, therefore you must understand that this may not be suitable if you depend totally of those funds that you are interested in investing.

Market price of the instrument may be affected by unpredictable market factors. Although you perform the best analysis sometimes you were not be able to eliminate risks, consider that there are some variables that may affect your calculations and these are not under your control.

Benefits with Reverse Convertibles
Enhance yield and current income, therefore, depending on the structure investors are allow to start with minimum amounts around: USD 1,000.00

When you have ownership of the underlying asset, these notes are a valuable opportunity working as a cost efficient vehicle for hedging a particular market exposure.

These investment opportunities typically offers a protection that work as a barrier to the downside it can be up to 10% or 30% on most notes with a common spread of 2%.