Liquidity Riskand Issuer Buy-Backs
In the event of an Investor requests an Issuer Buy-Back, they will not receive a refund of their Prepaid Interest or Fees.
The amount received will depend on the market value of the Units which will be determined by many factors before the Maturity Date including prevailing interest rates in Australia and internationally, foreign exchange rates, the remaining time to Maturity, and general market risks and movements. Depending on these various factors there is a risk the buyback price is zero at the time an Issuer Buy-Back is requested. Should this be the case then investors will incur a 100% loss of their investment if they proceed with completing the Issuer Buy-Back at that time. Investors should be aware the Units are designed to be held to Maturity and are not designed to be a trading instrument.
This carries certain risks for investors including:
- The derivative value is reduced by any margin earned by the underlying hedge provider/investment bank and the Issuer at the time the product is issued as well as at the time of the Issuer Buy back;
- the value of the derivative falling as the underlying Reference Asset falls;
- potential differences between how the derivative value changes and how the Reference Asset performance changes during the Investment Term (before maturity). This is not a one-for-one relationship;
- changes in volatility, interest rate or other market related factors impacting the value of the derivative;
- potential illiquidity in relation to the derivative or underlying Reference Asset; and
- counterparty risk. Counterparty risk is where the counterparty to the derivative contract entered into by the Issuer with an investment bank cannot meet its obligations under the contract. Any such risk occurring is likely to adversely impact the value of your Units.