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Société Generale launches UK’s first platform for LSE-listed CLNs

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Societe Generale is now providing UK based professional investors with the ability to buy and sell Credit Linked Notes (CLN) on the London Stock Exchange (LSE).  

This is in response to Investors who have been seeking ways to access the credit market in a liquid and flexible manner.
 
At the end of 2014, the bank launched its first LSE listed CLN linked to the credit worthiness of Marks & Spencer and plans future launches imminently.
 
The aim of a CLN is to provide Investors with regular income over the investment term, and to return capital at maturity. Such coupon payment and the repayment of the capital at maturity are linked to the credit worthiness of either a single corporate, financial institution, or a basket of different credits.
 
CLNs can be bought and sold at any time during LSE market hours just like a share. The minimum trading amount for a CLN is one unit, which costs £100 at launch and which is expected to vary over time with changing marketing conditions.
 
Three key risks of CLNs are:

1)  Credit Risk on the Reference Entity – If the Reference Entity was to become subject to a Credit Event during the Investment Term, you would lose any further Coupons and may lose some or all of your invested capital.
2) Capital at Risk – Capital is fully at risk.
3) Market Risk – The price of the CLN will vary on an intraday basis and may be higher or lower than the Issue Price.
 
Societe Generale is one of the leading European issuers of credit linked notes, having won 2014 Credit House of the Year from Structured Products magazine. Moreover Societe Generale took top spot in the league tables according to MTN-i by issuing over USD3.4billion in credit linked notes, a market share of over 40% and twice the next competitor. Societe Generale Fixed Income Research team has also been acknowledged as number one in Credit Strategy and Trade Ideas by the Euromoney Fixed Income Research Survey in 2014.
 
Societe Generale is looking to replicate this success in the UK by regularly offering new issues across varying credits, maturities and coupon types on the new platform.
 
“We are excited to bring our Credit Linked Note offering to the LSE’s Order Book for Fixed Income Securities. The listing of CLNs on the LSE is a natural extension to help further develop the listed credit market,” says Ryan Rogowski, Head of Asset Manager Solutions, Cross Asset Solutions, Societe Generale Corporate & Investment Banking. 
 
“Credit Linked Notes offer an alternative to standard fixed income securities as they can be tailored to meet the needs of Professional Investors (within the meaning of MIFID), particularly in accessing credits that may not be available in GBP and in small denominations,” says Helene Schmitt, Head of Credit Pricing London, Cross Asset Solutions, Societe Generale Corporate & Investment Banking.

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