National Bank Of Bahrain Launches Alternative Investment Vehicle

by Carla Johnson, Investors Offshore.com

30 January 2006

The National Bank of Bahrain has launched a new alternative investment vehicle which aims to deliver consistently high absolute returns, uncorrelated to equity markets, while keeping volatility at very low levels.

The Protected Structured Permal (PROSPER) Notes are being offered by NBB to both private and institutional investors.

The PROSPER Notes, denominated in US dollars, guarantee investors a minimum redemption at maturity equal to their initial investment while at the same time giving exposure to positive performance of the Permal FX Fund. The notes also offer investors both high contingent coupons and the potential for an additional return at maturity.

The PROSPER Notes are linked to the Permal FX Financials and Futures Fund, which aims to deliver absolute returns uncorrelated to market direction. The fund is a dynamic portfolio of some of the best known, and often closed, hedge funds in the world, with proven track records, and is managed by Permal, a renowned alternative investment houses.

The PROSPER Notes are linked to the performance of the PROSPER Index that allocates assets dynamically between the Permal FX Financials and Futures Fund and Reserve Asset units.

National Bank of Bahrain intends to make a secondary market in the Notes on a monthly basis during the entire term of the Notes, although the bank recommends that investors hold the PROSPER Notes for the full term of 5 years.

"The PROSPER Notes aim to resolve the dilemma of investors seeking interim payments while aiming to achieve high absolute returns by offering a protected exposure to the Permal FX Financials and Futures Fund," stated NBB.

The Permal FX Financials and Futures fund of hedge funds has achieved a 10.8% p.a. return over the last 5 years.

"The Fund provides the investor with a diversified exposure to global futures and commodity strategies by employing a multi-manager approach to invest in funds of various macro managers to achieve absolute returns," NBB explained.

"Not only has the Permal FX Financials and Futures Fund been able to maintain a low volatility (its annual standard deviation is 5.7%, since November 2000) and generate positive performance, but it has also preserved capital in down markets," the bank added.

The 6-week subscription period started on 25 January and closes on 15 March 2006. The minimum investment is US$10,000.

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