UK – Institutional investors who brought Société Générale’s ‘SG Football 2006’ warrant – launched in February ahead of the 2006 World Cup – may have lost out following the market downturn in May.
The warrants were issued at the start of February at £1,020 (€1,494) each. According to SG equity derivatives sales executive Christophe de la Celle, “The interest has been quite strong in the product with a mix of both institutional and retail flow.”
However, the price has now dipped to £961 per warrant, de la Celle told IPE. “From issue level, the basket is down 2% and the product is down 4%,” he said.
The SG Football 2006 warrant gives investors leveraged exposure to a basket of nine European companies selected as likely to benefit financially from the World Cup. Many are sponsors or FIFA official partners.
According to SG, to qualify for the World Cup basket, each stock must have outperformed in the run-up to at least four of the last five major football events, and have a market cap greater than €3bn.
The basket includes Heineken, Puma, Nestle, Danone, Adidas-Salomon and hotel and leisure group Accor.
The warrant was up 13% until the mid-May correction – close to the roughly 30% average return anticipated by SG at the product's launch. The warrant can be traded at any time on the London Stock Exchange and will expire at the end of July.
To limit losses, the warrant has an inbuilt Stop-Loss, which is triggered if the value of the basket falls by 30% or more, according to an SG release.