The Europe Inflation Bonus&Safety 3 Certificate provides for an annual fixed interest rate and an additional interest rate in the amount of the annual inflation rate (HICP excl. tobacco):
Annual interest payment = 1.15% fixed interest + additional interest rate in the amount of the annual inflation
The HICP price from July of each year is compared with the index level of Juliy of the previous year. The annual fixed interest rate than rises by the percentage index growth. The annual interest payment is effected on the ensuing October. Redemption at the end of term (October 2022) depends on the performance of the EURO STOXX 50® index: the certificate is redeemed at 100% (equivalent to EUR 1,000 per nominal value), provided that the EURO STOXX 50® never loses 51% or more of its starting value during the observation period.
If the EURO STOXX 50® touches or drops below the barrier of 49% of the starting value (59% safety buffer), redemption will be effected according to the performance of the index (percent performance of the EURO STOXX 50® from the starting value to the closing price at the final valuation date). The opportunity for yields is in any case limited by the annual interest payments. Investors do not participate in price increases of the underlying above the starting value.