Merrill Lynch launches temperature-linked certificate

The new two-year euro-denominated certificate offers an annual return based on the average annual temperature at Rome's Ciampino airport. The investment product is 100% principal-protected and offers a temperature-contingent coupon of up to 16% annually.

The certificate starts to pay out at an average annual temperature of 16.38°C, with the coupon rising linearly to a cap of 16% at an average of 17.38°C.

Jens Boening, Merrill Lynch's head of Europe, Middle East and Africa weather derivatives structuring, said: "It enables agricultural, commercial and retail clients in Italy, who have recently suffered from rising temperatures, to mitigate the risk of above-average heat."

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