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Gilliat launches AAA rated fixed income plan

Gilliat Financial Solutions has launched the income series issue 2, offering investors a AAA rated counterparty and annual potential returns of up to 7.72 per cent.

The plan targets a fixed annual income of 2 per cent with the potential for an additional annual bonus payment of 5 per cent, 5.45 per cent or 5.72 per cent depending on the underlying index.

Investors can choose to link to either UK equities, commodities and property. The bonus payments will be paid if the underlying value is equal to or greater than its start value at each annual observation.

The bonds purchased to secure the capital protection on the plan are AAA rated European Investment Bank bonds. 

Morgan Stanley and Co International will provide the derivative contract for this product and collateral arrangements are used to mitigate credit risk. 

The product has a 50 per cent soft protection barrier on a 1 for 1 downside if the barrier is breached.

Investor’s capital will reduce by 1 per cent for every 1 per cent the underlying closes below its start value at the end date. Investment capital will be returned in full if the underlying recovers to its start value or greater by the end date.

The first 10 per cent of losses in the underlying are not protected, irrespective of whether the 50 per cent capital protection barrier is breached. 

Gilliat Financial Solutions managing director Adrian Neave says: “We believe that this plan would suit investors who have a positive outlook on the markets and are prepared to take a level of risk in order to achieve an above average level of income.”


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