Reverse Convertibles are issued with an initially set fixed coupon which at the end of maturity pays substantially higher interest rates than the market. If in the observation period before the end of maturity the closing price of the underlying asset is above its set initial (Strike) price set at the beginning of the observation period, the Reverse Convertible is redeemed at its nominal value plus the coupon. If the closing share price is below its initial price, the investor is paid the nominal value in shares. The coupon is paid in cash. The number of shares to be delivered per nominal value is set according to the initial price. The remaining nominal value, which is below the value of 1 share, is paid in cash.
In case of Reverse Convertible with more than one underlying share, redemption is based on the share with the worst performance. If at the end of the observation period before maturity the price of this share is above its initial value, the bond is redeemed at its nominal value plus its coupon.
If at the end of maturity the price of the share with the worst performance is below its initial value, the investor again receives the nominal value redeemed in shares. The coupon is paid in cash. The number of shares to be delivered instead of the nominal value is set at the beginning of the period based on the initial price of the worst-performing share. The remaining nominal value, which is below the value of 1 share, is paid in cash.