WestLB Issues 10-Karat-Bond
The 10-Karat-Bond issued today by WestLB is a sparkling idea which holds a lot of promise. After reaching the target interest, this € 200 million bearer bond pays 10% interest per year until maturity. The bond matures on December 19, 2011. Value date is December 17, 2004.
WestLB AG’s 7-year 10-Karat-Bond offers investors a guaranteed interest rate of 5% during the first two years of the investment. Starting from year 3, investors can potentially earn unlimited interest. There is also an opportunity to earn interest at a guaranteed rate of 10% until maturity. The safety of this investment is maximised by a 100% capital guarantee which ensures full payback of the invested capital at maturity.
During the first two years of the life of the bond, investors earn interest at a guaranteed rate of 5% per year. Starting from year 3, annual interest will be calculated as follows: : 10% + 30% of the lowest performance of any of the basket stocks at the relevant observation date, with such performance being determined on the basis of the record date. During the third interest rate period, investors earn interest at a guaranteed rate of 10% per year.
Investors also benefit from a so-called kick-out mechanism which prevents stocks with a particularly weak performance from compromising the overall success of the investment. Once a year, the worst-performing stock will be removed from the basket if it trades at 50% or less of its initial reference value. The initial basket comprises the following stocks: Aegon N.V.; Allianz AG; Bayer AG; BMW AG; Canon Inc.; Deutsche Lufthansa AG; France Telecom S.A; Hewlett-Packard Company; Hitachi Ltd.; ING Groep N.V.; Koninklijke Philips Electronics N.V.; Lloyds TSB Group plc.; Microsoft Corporation; Nikon Corporation; Nokia OYJ; NTT DoCoMo Inc.; Oracle Corporation; Siemens AG; Sanofi-Aventis S.A.; SAP AG; ThyssenKrupp AG; Toyota Motor Corporation; Vodafone Group plc.; Walt Disney Company.
The bond (ISIN Code: DE000WLB1WA8) will be listed on the Frankfurt and Stuttgart (EUWAX) Stock Exchanges (“Freiverkehr”).