Asia Focus

Autocallable fixed coupon note on Japanese express train stocks

Product Rationale

In the highly competitive high-speed train business, Japan continues to outpace its competitors.

Unlike its competitors which tend to market themselves along the lines of cost and speed, Japan’s value proposition has been safety, reliability and the high performance of its express trains. Tourism in Japan has also cemented its long-acclaimed Shinkansen system’s status as the global gold standard in express train systems.

In recent years, Japan has gathered momentum in making significant inroads in offshore express train markets. Apart from expanding its footprint in selling Shinkansen to the US and the UK, Japan has also sold its express trains in Indonesia. In a landmark deal, the Shinkansen will be adapted for use in the future for a line extending from Thailand to Singapore.

Product Description
  • Issuer: Commerzbank AG
  • Maturity: 3 years
  • Currency: quanto JPY
  • Underlyings:

Underlying name

Bloomberg ticker

Central Japan Railway Co.

9022 JP Equity

Mitsubishi Heavy Industries

7011 JP Equity

Kawasaki Heavy Industries

7012 JP Equity

  • Coupon: 8.5% p.a
  • KO barrier: 100%
  • Daily KI barrier: 65%
  • Put strike: 100%
  • Quarterly pay-off: 
    • Client receives coupon
  • Early termination: 
    • If on any quarterly observation date, Worst of Performance is at or above KO barrier, client receives coupon (if any) and note is early redeemed
  • At maturity (if early termination has not occurred):
    • If Worst of Performance is at or above put strike, client redeems 100% of the note
    • If Worst of Performance is below put strike and Worst of Performance has never fallen below daily KI barrier on any observation day, client redeems 100% of note
    • Otherwise, client receives a number of shares of the worst-performing share equal to the denomination of the note divided by the worst-performing share’s strike price
  • Worst of Performance (t): Performance of the worst-performing share on observation date (t)
  • Performance of a share: Price(t) / Price(initial)
Key Benefits
  • Investor’s capital is protected by a low daily KI barrier of 65%
  • Investor receives a high conditional coupon of 8.5% p.a.
Key Risks
  • In a strongly trending equity market, the investor potentially receives a lower return from the note than compared to investing in the underlying stocks themselves
  • The investor is subject to the issuer risk of Commerzbank
  • Capital invested is fully at risk
  • Please also refer to Additional Risk Disclosures below

Additional Risk Disclosures
Before investing in this product, investors should carefully consider its appropriateness and suitability, and the following additional risks: 1. Issuer Risk: Any failure by the issuer to perform its contractual obligations, when due, may result in the loss of all or part of the invested capital. 2. Counterparty Risk: Any failure by Commerzbank AG to perform its contractual obligations, when due, may result in the loss of all or part of the invested capital. 3. Market Risk: Various market factors may affect the value of the investment or the underlying assets, including but not limited to the impact of volatility, interest rates, dividends (if any), foreign exchange. 4. Liquidity/Secondary Market Risk: Under normal market conditions Commerzbank will endeavour to provide a secondary market price. However, Commerzbank has no obligation to make a secondary market in the instruments concerned. Accordingly, under some circumstances, the secondary market for the investment may be limited and subject to wide bid/offer spreads. 5. Reinvestment Risk: The risk that the investment redeems prior to maturity at a time when reinvestment opportunities are not favourable for the investor. 6. Redemption Risk: The risk that the investor may receive substantially less than the amount invested, if they liquidate the investment prior to maturity. 7. Tax Risk: There may be tax implications based on where the investor resides. Please consult a tax professional before investing. 8. Legal Risk: There may be legal restrictions depending on where the investor is domiciled. It is advised to seek legal guidance prior to investing. When specified, the terms ‘guaranteed’ and ‘protected’ are subject to the creditworthiness and solvency of Commerzbank and although financially strong there is the possibility that returns may not be met in the unlikely event of a Commerzbank failure. For additional information on the product features and key risks, please contact your sales advisor or refer to the contacts page.