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Deutsche plans $2 million 10-year PowerShares DB US Inflation ETNs
By Jennifer Chiou
New York, Oct. 24 - Deutsche Bank AG, London Branch plans to price $2 million of PowerShares DB US Inflation exchange-traded notes due Nov. 30, 2021 at inception, according to a 424B2 filing with the Securities and Exchange Commission.
The notes are linked to the linked to the month-over-month returns of the DBIQ Duration-Adjusted Inflation index.
The long inflation index seeks to isolate a long exposure to the market's expectation of future inflation and is designed to produce a 1-point increase in the level of the long inflation index for every 0.01% increase in the market's expectation of future inflation by measuring the duration-adjusted combined performance of a notional long position in a hypothetical portfolio of five-year, 10-year and 30-year TIPS and corresponding notional short positions in futures contracts on U.S. Treasury bonds with roughly equivalent terms to maturity as the TIPS, the filing stated.
The index return is derived by combining the returns on the DB 3-Month T-Bill index and the inflation index return.
The notes are putable at any time, subject to a minimum of 50,000 notes and a repurchase fee of up to $0.075 per security.
The current principal amount will be $50 per security from the inception date to Nov. 30. Thereafter, the amount will be reset monthly.
Upon redemption or at maturity, the payout will be equal to the then-current principal amount multiplied by one plus the T-Bill index return plus the index multiplier times the inflation index return on the valuation date, minus a fee of 0.75% per year.
The index multiplier is $0.10, with the effect being that for each 1-point increase of decrease in the inflation index, there will be a corresponding gain or loss in the value of the securities.
The notes (Cusip: 25154W225) will be filed for listing on the NYSE Arca under the symbol "INFL."
Deutsche Bank Securities Inc. is the underwriter.
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