Global equities have had a great start to the year and major equity indices are up in excess of ten per cent this year. In a rising equity market, equity market volatility tends to be trending down. In fact, indicators for US equities show that volatility is once again well below its long term average.

The lower equity market volatility translates into a lower coupon for yield enhancement products that have equities as underlyings. The reason is that this type of product pays a coupon, whose level is among others dependent on the (implied) volatility of its underlyings at the time of setting the final terms.

Thus, risk friendly investors may want to take a look at stocks that have recently experienced an increase in volatility due to company-specific factors. One area where this has been painfully the case is airline-related stocks, in particular Boeing whose stock tumbled due to serious concerns about the safety of its Boeing 737 Max aircraft. At the industry level however, aerospace is experiencing strong growth and the market for aircraft manufacturer is still an oligopoly run by Airbus and Boeing.

In this context, risk friendly investors may want to consider the JB Callable Barrier Reverse Convertible on Airbus and Boeing in subscription. This product pays a (indicative) quarterly coupon of 11.50% p.a..

In return for receiving a guaranteed coupon, the investor should be willing to bear the risks of this product: the invested capital is protected at maturity up to the knock-in barrier at 65% only. However, if any one of the underlyings touches or falls below its knock-in barrier during the lifetime of the product and the fixing of the underlying with the lowest performance is below its initial value (equal to the strike price) at maturity, investors receive an amount which takes into account the decrease of the underlying relative to its initial value.

The product is callable quarterly and is settled in cash. The final redemption date, if the product is not called, is 31 December 2019.