Its "Super Notes XVI" are linked to a basket of 10 well-known China-related companies listed in Hong Kong. The notes have a minimum coupon of 2% payable after one year and 3% payable after two-and-a-half years, giving a total minimum return of 5% in two-and-a-half years and a maximum total return of 20% in the same period.
The potential coupon is linked to the average return of the companies in the basket û PetroChina, Sinopec, CNOOC, China Shenhua Energy, China Mobile, China Unicom, China Telecom, China Netcom, China Life and Ping An Insurance.
Here's how they work. The coupon payable on the first payment date is the higher of 2% and the average return of the companies as determined on the first "coupon calculation date". The return achieved by each company is capped at 8%.
On the second coupon date, the coupon payable is the higher of 3% and the average return of the companies as determined on the "second coupon calculation date". The return achieved by each company is capped at 12%.
"The instruments offer the return of principal at maturity, a guaranteed overall coupon and an attractive variable coupon. All these features were included in response to strong demand from our clients û in this case, retail banks û for short-dated guaranteed products for their customers," says Min Park, head of equity risk management at UBS in Asia.
"Replicating the structure of the equity-linked deposit launched in mainland China in January this year, the notes tap into the increasing demand among investors for China-related investment,ö adds Thomas Fang, executive director of UBSÆs risk management products sales team.
Retail investors in Hong Kong may subscribe for the notes up until June 9.
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