Common use of Zero Coupon Notes Clause in Contracts

Zero Coupon Notes. Except where the Notes bear interest on a separate Interest Basis or are redeemed early, Zero Coupon Notes will bear no interest and an investor will receive no return on the Notes until redemption. Any investors holding these Notes will be subject to the risk that if the Notes are redeemed prior to their Maturity Date, an investor may not be able to reinvest the Amortised Face Amount (see below) so as to receive returns equivalent to the Final Redemption Amount that would, absent such early redemption, have been paid on the Maturity Date. In general, the prices at which Zero Coupon Notes trade in the secondary market tend to fluctuate more in relation to general changes in interest rates than prices for conventional interest-bearing Notes. The longer the remaining term of the Notes, the greater the price volatility as compared to conventional interest-bearing Notes with comparable maturities. Zero Coupon Notes are also subject to different early redemption and late payment provisions (see Conditions 5(e) and 5(j)). In contrast to the scenario described in risk factor 3.3 above, if the Prohibition of sales to consumers in Belgium is specified as applicable in the applicable Final Terms, the Early Redemption Amount for Zero Coupon Notes will be the Amortised Face Amount, which is calculated by discounting back to the relevant date of payment the amount that would otherwise have been payable at maturity, using the Amortisation Yield on an annual or semi-annual compounded basis (depending on what is specified in the applicable Final Terms). If the Prohibition of sales to consumers in Belgium is specified as not applicable in the applicable Final Terms, the Early Redemption Amount shall be calculated in accordance with Condition 5(e)(ii).