Fwd: Investment Structures

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Jeffrey E.

Jeffrey,

Hope all is well.

Further to your meeting, HE Sheikh Haad asked me to send you a summary of the 2 investment structures.

EQUITY PUT OPTIONS;

Put option on the worst performing stock in a basket
One year structure
0.40 Coupon guaranteed irrespective of performance of the stocks in the basket.
Put option strike at 70% of reference/spot

We identified 3 baskets based on stocks we are comfortable to own in a downside scenario at a 30% discount.

Basket 1; BHP Billiton, Bank of America, Shell, BNP Paribas
Basket 2; Credit Suisse, General Motors, BASF, General Electric
Basket 3; Barclays, Adidas, Siemens, Santander

The coupon on the above baskets ranges between 8.5 – 9.5% without any leverage.

Obviously you can select any stock of your preference in the basket. Stocks with higher volatility and less correlation will generate a higher coupon for the basket.

FIXED INCOME;

We identified 20 investment grade names to place in a portfolio
Given the uncertainty in the energy, commodity and bank sectors we selected some of these names to maximize returns
5 year structure
Exposure through 5 year CDS
Based on leverage we are able to generate double digit returns.
The risk to the return is margin calls on the leverage if the value of the portfolio declines due to spreads widening
Principal risk is based on default in any of the credits in the portfolio which is limited to 5% per name.

I hope the above is useful. Please let me know if you have any questions.

Best

Shahzad.

jeffrey E.

As requested;

List of Fixed Income Names

Bucket
Reference Entity
Type
Weight
5y CDS Spread
Moody’s S&P Fitch

1
Sovereign
Portuguese Republic
Senior
5.00%
275
Bal
BB+
BB+

2
Federation of Malaysia
Senior
5.00%
146
A3
A-
A-

3
Autos
General Motors Co
Senior
5.00%
210
BBB-
BBB-

4
Volkswagen AG
Senior
5.00%
162
A3
BBB+
BBB+

5
Commodity Producer
Petroleos Mexicanos
Senior
5.00%
350
Baa3
BBB+
BBB+

6
Rio Tinto Ltd
Senior
5.00%
175
Baa1
A-
A-

7
BHP Billiton Ltd
Senior
5.00%
158
A3

Shahzad Shahbaz

in your fixed income basket, which stocks did you choose? 2. which banks have you found, or person at bank that you think provides the best execution and flexibility? 3. AO Sk Hamad said that one of the banks might take the first two stock loss? 4 Do you currently invest in Tech or tech funds? med tech, bio tech, cyber etc.?

Richard Kahn

Forwarded message:

From: Shahzad Shahbaz

Date: Sun, May 22, 2016 at 7:09 AM

Subject: RE: Investment Structures

To: "jeffrey E." jeevacation@gmail.com