Designer Mules

In the first of two articles, Stephen Weston of Deloitte & Touche takes a look at a variety of the structured notes issued in the capital markets, and the driving force behind each issue.

Stephen Weston is a Tax Partner at Deloitte & Touche, Global Strategy Group. He can be contacted on Tel: 020 7304 8567 or by email at sgweston@deloitte.co.uk

A mule is defined in the Oxford dictionary as either (i) an animal that is the offspring of a horse and a donkey, known for its stubbornness, or (ii) a backless slipper (for the fashion conscious readers a high-style form of ladies shoe). On a more serious note, it can also be used to describe a structured note, the subject of this article. For a variety of reasons, an investor may not want to be party to a derivative direct, however these problems can be overcome using a structured note. Such a note can be analysed as a cash instrument that merely acts as a mule for the embedded derivative.