Extendible Step-up Notes

An Extendible Step-up Note is a good alternative to conventional fixed income products because of its higher coupon rate. A higher coupon rate is offered as the issuer

has the option to extend the maturity of the note, but the maturity can only be extended on specified dates and for a specified time. If the maturity is extended, the investor will

receive a higher “step-up” coupon to offset the impact of rising interest rates. These notes are backed by high‑quality issuers such as the major banks and provide full principal protection if held to maturity, similar to traditional bonds.

Investor Rationale: Extendible Step-up Notes yield higher returns than comparable bonds.

Investor Profile: Clients should be flexible in terms of when they will be receiving their principal repayment, since the maturity date of the note can be extended for a certain period. If you are flexible and seeking both higher returns than those offered by conventional fixed income products, and a steady income stream, Extendible Step‑Up Notes can be an attractive addition to your portfolio.

Advantages

• Higher coupon rate

• Backed by high-quality issuers

• Simple structure

• 100% Principal Protection if held to maturity

• Liquidity in daily secondary market subject to availability

Risks

• Reinvestment Risk

• Price Risk

• Credit Risk of issuer