CIFN is a yield enhancement product that provides potential higher returns than the regular MYR Deposits. The bank has a right to call the CIFNs at a predetermined call date which will be stipulated in the Term Sheet. Customers will continue to earn yields as long as 3-month-KLIBOR (Kuala Lumpur Interbank Offered Rate) fixes below a predetermined strike level. This investment is suitable for investors who have a view that 3-month-KLIBOR will remain below the strike level during the tenor of the product.
Example: Callable Inverse Floater Notes (CIFNs)
Investors can invest in CIFNs for 5 year tenor (subject to call by HLBB), where the bank pays 5.00% p.a. for first 6 months and subsequently, a coupon that is based on 3 Month KLIBOR fixing below a predetermined strike level.
The coupon will have the formula of 4.50 x (4.50% - 3 Month KLIBOR), floored at 0.00%:
- If 3 Month KLIBOR fixes at 3.00% for the relevant period, customers will earn 6.75% p.a. [4.50 x (4.50%-3.00%)]
- If 3 Month KLIBOR fixes at 4.00% for the relevant period, customers will earn 2.25% p.a. [4.50 x (4.50%-4.00%)]
- If 3 Month KLIBOR fixes at 5.00% for the relevant period, customers will earn 0.00% p.a. [4.50 x (4.50%-5.00%)], floored at 0.00%