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Power Reverse Dual Currency (PRDC) Bond

From the Collaborative Bond and Money Market Data Portal

A PRDC or Power Reverse Dual Currency Bond is a negotiable debt instrument that exposes the investor - in exchange for a higher return - to a specific Foreign Exchange risk.

 

A Dual Currency bond pays coupons in a different currency than the repayment of principal.  Coupon is paid in the investors’ currency while principal is paid in a different currency.

 

A Reverse Dual Currency Bond (RDC) is a negotiable debt instrument which does the reverse and pays a foreign interest rate in the investor's domestic currency.

 

In a Power Reverse Dual Currency Bond (PRDC) the coupons rise as the foreign currency depreciates. They act as a carry trade with leverage. Some PRDCs include a digital cap that locks the rate once it reaches a certain level. They can also include a barrier or knockout and cancel provision for the issuer.

 

In the Collaborative Bond and Money Market Data Model a PRDC bond appears with the attribute "FX – PRDC" in the field Category or Structure. It is part of the Category Group “FX-Linked”.

Category or Structure is a classification that is given to a Debt Instrument by a market participant. This therefore is not a legal term and so is distinct from what may be found in a Termsheet or Pricing Supplement. It is a clarification that is useful in distinguishing different types of Debt Instruments in various market segments.

 

Based on available data, in 2018, well over USD4.5bn equivalent of PRDCs was issued.   

 

For information on FX - PRDC Bonds trades, please use CMDportal's Instrument Search tool.
For information on the size of the FX – PRDC Bond Market, please use CMDportal's Data Sheet tool. 
For information on the composition of the FX – PRDC Bond Market, please CMDportal's Issuer Search tool. 
For information on active dealers in the FX – PRD Bond Market, please use CMDportal's Dealer Search tool. 

 



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