Chapter 16: Principal-Protected Notes (PPNs)

In this section

• Principal-Protected Notes (PPNs) – What Are They?
  Discover the essence of Principal-Protected Notes (PPNs), how they preserve capital through zero-coupon bonds, and how embedded derivatives can provide upside exposure to markets.
• PPN Structures and the Use of Derivatives
  Learn how derivatives power Principal-Protected Notes by combining zero-coupon bonds with embedded call options and other dynamic features to preserve capital and capture market upside.
• CPPI and Zero-Coupon Bond Plus Call Option Structures – Key Differences
  Discover the differences between dynamic CPPI approaches and static bond-plus-option structures for principal-protected notes, exploring their mechanics, advantages, and best uses.
• CSA Disclosure Standards for PPNs
  Explore how the Canadian Securities Administrators (CSA) require thorough, plain-language disclosure of Principal-Protected Notes (PPNs), covering key aspects such as issuer credit risk, product structure, fees, and redemption terms.
• Embedded Derivatives & Credit Risk to Issuer
  Explore how embedded derivatives within principal-protected notes interact with issuer solvency, credit rankings, and regulatory guidelines, underscoring the importance of assessing counterparty risk to ensure effective investment strategies.
• Comparing PPN Structures with Other Structured Notes
  Explore how Principal-Protected Notes (PPNs) stack up against various types of structured notes in Canada, including market-linked GICs, non-principal-protected products, leveraged notes, and hybrid fixed income offerings.