Fixed IncomeJan 16 2015

French bank launches credit-linked notes platform

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French bank launches credit-linked notes platform

Société Générale is targeting advisers with the launch of the what it claims is the UK’s first platform for credit-linked notes listed and traded on the London Stock Exchange.

The move is in response to investor demand for ways to access the credit market in a liquid and flexible way, the French bank said.

At the end of last year, the bank launched its first LSE listed CLN linked to the credit worthiness of Marks and Spencer and plans future launches imminently.

The aim of a CLN is to provide investors with regular income over the investment term and to return capital at maturity. Such coupon payment and the repayment of the capital at maturity are linked to the credit worthiness of either a single corporate, financial institution, or a basket of different credits.

The minimum trading amount for a CLN is one unit, which costs £100 at launch and is expected to vary over time with changing marketing conditions.

They benefit from liquidity, flexibility and ease of access, but do put investor capital fully at risk, along with associated market risks and credit risk on the reference entity.

The bank is looking to regularly offer new issues across varying credits, maturities and coupon types on the new platform.

Ryan Rogowski, head of asset manager solutions, within cross asset solutions, at Société Générale corporate and investment banking, stated that the listing of CLNs on the LSE is a natural extension to help further develop the listed credit market.

“Credit Linked Notes offer an alternative to standard fixed income securities as they can be tailored to meet the needs of professional investors, particularly in accessing credits that may not be available in GBP and in small denominations,” added Helene Schmitt, head of credit pricing in London for the firm.

peter.walker@ft.com