This month sees the annual influx of capital markets luminaries to London for Euromoney's Global Borrowers and Investors Forum. Just across the English Channel, it also sees the kick-off of a minor sporting event: soccer's World Cup. Perish the thought that dedicated capital-markets players might regard attending the former as an opportunity to drop in on the odd game or two.
The allotment of World Cup tickets has been branded a farce by many outside France, with dedicated fans unable to get in to matches. It's a familiar feeling for those banks unable to squeeze onto the sponsors' panel for Euromoney's forum.
Aggrieved at their exclusion, a number of banks are believed to have resorted to spoiling tactics. Chartering private jets, they are intending to spirit away less-than-dedicated delegates to watch World Cup matches.
Those who don't get offered a freebie flight to France may be able to console themselves by taking a punt on the outcome of the competition, at least if they have a football-loving corporate treasurer.
An MTN term sheet has been spotted offering investors a football-linked note. The idea is fairly simple. A zero-coupon note is issued at 100%. If the investor's team wins the cup he receives a hefty payout, if not, redemption is at par.
The issuer of the note invests a chunk of the principal at a fixed interest rate that will yield the 100% redemption amount. He then takes the remainder of the principal down to the local bookmaker and places a bet on the investor's chosen team.
The note is now perfectly hedged. If the investor's team wins the tournament, the winnings from the issuer's bet will cover the exposure on the note. If the team loses, the issuer's investment yields the par redemption amount. For the investor, it's effectively a principal-protected bet on the outcome of the tournament.
We don't have many tickets for the final going spare, but if anyone can come up with a more imaginative World Cup product a free place at the forum is yours. Now there's an incentive. James Rutter