Goldman Sachs has listed three callable participation certificates on Cert-X, providing investors with access to single stocks or an index basket, coupled with built-in capital protection.
The first product tracks a basket of three indices: the Nikkei 225, SMI, and Stoxx Europe 600, and matures in four years on September 2, 2030. The issuer can redeem it early at three predefined dates in August 2027, 2028, and 2029. If called early, investors receive a predetermined payout, mirroring a 10% annual gross return on the nominal value of 1,000 euros. An early redemption after one year would yield 1,100 euros, after two years 1,200 euros, and after three years 1,300 euros.
If the product is not called early and reaches maturity, the final payout hinges on the worst-performing index in the basket, multiplied by a participation factor of 2.95. However, the certificate includes a floor set at the nominal value, ensuring investors recover their initial capital regardless of index performance. This structure offers leveraged upside exposure while guaranteeing capital protection. For instance, if the worst-performing index returns 10% over the term, the investor would receive a 29.5% return, plus the initial investment.
These callable certificates give issuers the right to terminate early when market conditions are favorable for refinancing, typically when interest rates decline or markets have risen consistently. For example, if the Nikkei 225 sees a significant increase within the first three years, Goldman Sachs might choose to redeem the certificate early to capitalize on the bullish market.
The second certificate focuses on Acea, an Italian utility company. It too has a four-year maturity, ending August 26, 2030, with monthly call options starting after the first six months. The annual coupon is set at 9% of the 100-euro nominal value. At the first call date, investors would receive 104.50 euros, with the payout increasing by 0.75 euros each subsequent month if the issuer decides to call. This structure incentivizes early redemption during favorable market conditions.
At maturity without early redemption, the payout reflects Acea’s stock performance with a participation factor of 2 and the same nominal value floor. For example, if Acea’s stock price increases by 20% over the term, the investor would receive a 40% return, plus the initial investment.
The third certificate is tied to Leonardo, an Italian aerospace and defense company. It matures September 2, 2030, with monthly call options beginning after six months and a 9% annual coupon on the 1,000-euro nominal value. The first call would pay 1,045 euros, with monthly increments of 7.5 euros. Unlike the other two products, this certificate has a participation factor of just 1, meaning it offers no leverage effect—only capital protection and direct exposure to Leonardo’s stock performance. Thus, an investor would receive a 45% return at the first call date, or Leonardo’s stock performance at maturity, whichever is higher.
All three certificates guarantee investors recover their initial capital at maturity. The key distinction lies in their upside potential: the index product offers the strongest leverage at nearly 3x, the Acea certificate provides 2x exposure, and the Leonardo product functions as a straightforward capital-protected investment without any multiplier benefit. This affects how each certificate performs if markets move favorably during the holding period. For instance, a 10% increase in the Stoxx Europe 600 would result in a 29.5% return for the index certificate holder, a 20% return for the Acea certificate holder, and a direct 10% return for the Leonardo certificate holder.
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