Structured notes

Frequently asked questions

• What do we mean by secured?

  Investors have no credit exposure to Investec Bank plc.

• How is this achieved?

  When investors purchase the Structured Note the cash proceeds are used to buy securities which are placed in the security pool. The security pool is a discrete, secured, ring-fenced account with bank or financial institutions who act as independent custodian.

• How is the ring-fenced account enforced?

  A fixed charge over the security pool is registered at Companies House in favour of the Independent Trustee who acts on behalf of the Structured Note holders in the event of an Investec default.

• Is there daily margining?

  Yes. If the value of the security pool falls below the value of the Structured Note plus the Independent Amount (see definition below), Investec will be required to post additional security in minimum increments of £10,000 or equivalent. This is checked on a daily basis.

• What happens if the custodian defaults?

  The counterparty bank or financial institution act as our independent custodian. Should they default, Investec will appoint a new custodian to hold the security. The security can only include the fixed-rate bond plus cash and gilts.

• What is the credit Reference Entity?

  This is the credit exposure that investors chose to take (i.e. the fixed coupon bond issued by the underlying corporate). The fixed income from the credit Reference Entity bond is converted by Investec into the desired payoff profile (floating/inflation-linked). The credits available include Financials, Supranationals, Sovereigns and Non-Financials/Corporates. This range of credits gives investors the flexibility to match their risk appetite with their desired payoff profile.

• What if the Reference Entity defaults?

  The structured note ceases to pay any further coupons and investors will receive the recovery rate of the Reference Entity, less any costs of unwinding hedges put in place by Investec to provide the payoff profile of the structured note. The recovery amount may therefore be more or less than the underlying Reference Entity recovery amount.