The cut in sterling interest rates last month, which will mean cuts in interest rates paid to savers, should further stoke up demand this year. Guaranteed bonds offer a return linked to major stock markets, or currency movements, but with a money back guarantee, if the forecast gains do not materialise.
Returns are payable annually or at maturity.
Last year Royal Bank of Scotland International and NatWest Offshore launched its first guaranteed bond linked to the Nasdaq 100, the leading index of technology and telecom stocks. So in January it launched another version with a shorter, three-year term. The bond offers a minimum return of 10pc but the maximum is 108pc, if the Nasdaq stages a spectacular recovery. The closing date of the issue is March 26, but will be earlier if fully subscribed. However, given the state of the Nasdaq, the bond is not a one-way bet on high returns.