Fears of rising interest rates spurs switch and floored note issuance

As investors seek protection against interest rate rises, Bank of America Merrill Lynch and Morgan Stanley are among the banks responding with rates products offering minimum returns.

Concerns over future rates rises are driving demand for zero accreters

Bank of America Merrill Lynch (BAML) has privately placed €130 million of fixed-to-floating rate structured notes as appetite for interest rates products is fuelled by concerns about rising rates. The 12-year notes are called switch notes that pay 5.1% for the first three years, after which the payments switch and investors are paid the 10-year euro swap rate, floored at 4% and capped at 8%.

BAML would not comment on where the notes had been sold but London-based bankers suggested that the