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Index-linked Bond Northern Europe

Basic and Extra

In Europe, economic growth is rather heavily split. While the southern Europe struggles with debt problems and slow growth, the outlook and growth figures are on average much better on the northern side of the Alps. Even though uncertainty has increased in the equity market throughout the spring, you can pick the raisins out of the bun with the right share selections. The Nordic countries, Germany and the Netherlands are heavily export-driven economies and their growth has been brisk in the last few years. These equity markets offer good investment opportunities for Finnish investors - although the significance of share selection has grown.

Index-linked Bond Northern Europe

Index-linked Bond Northern Europe is a bond issued by Nordea Bank Finland Plc. Its maturity is about five years and its yield is based on the performance of ten shares forming a share basket. If the value of the share basket goes down, only the nominal capital of the bond is returned to the investors at maturity.

The bond comes with two alternatives: Basic and Extra. The alternative Basic is suitable for a cautious investor. Its yield at maturity is 75% of the increase in the value of the share basket in accordance with the terms of issue. The alternative Extra suits risk-tolerant investors who seek a higher return. Its yield at maturity is 140% of the rise in the share basket value in accordance with the terms of issue.

The increase in the value is calculated as the difference of the initial price of the shares forming the share basket and their final price. The initial price is the closing prices of the shares on 23 August 2011. The final price is the average of the quarterly closing values of the reference asset from 5 August 2014 to 5 August 2016.

Risks of the investment

The index-linked bond involves a risk of the issuer Nordea Bank Finland Plc’s repayment ability. The risk relating to the issuer's repayment ability means the risk that the issuer becomes insolvent and cannot fulfil its commitments, for example, in the event of the issuer's bankruptcy. The investor can lose the invested capital and the possible yield partially or in full in the event of the issuer's insolvency. Nordea has a credit rating Aa2 by Moody's and AA- by Standard & Poor's. The bond is unsecured.

The investor can lose the invested capital for the part exceeding the nominal value either partially or in full. In the Extra bond this premium risk is about 10%, as its subscription price is about 110%. The investor can also sell Index-linked Bond Northern Europe on the secondary market before maturity. The repurchase price may be above or below the bond’s nominal value. In normal market conditions Nordea quotes a secondary market price for the bond on all banking days when banks are generally open in Finland.

Share basket

The share basket consists of ten shares in which Nordea sees long-term potential. All companies in the share basket have equal weights (1/10). Read more about the companies and the observations of Nordea Equities Finland on pages x–x. In the table below are the recommendations of Nordea Equities Finland given on the companies in the share basket.

Company		Sector	Country	Recommendation
1	Adidas AG	Consumer discretionary	Germany	Buy
2	Bayer AG	Health care	Germany	Buy
3	BMW AG	Consumer discretionary	Germany	Strong Buy
4	Heineken NV	Consumer discretionary	Netherland	Buy
5	Neste Oil Oyj	Energy	Finland	Buy
6	Novo Nordisk A/S	Health care	Denmark	Strong Buy
7	Scania AB	Commercial goods and services	Sweden	Strong Buy
8	Siemens AG	Gonglomerate	Germany	Buy
9	Telenor ASA	Telecommunications	Norway	Strong Buy
10	Tieto Oyj	information technology	Finland	Strong Buy

Share basket performance June 2005–June 2011

Starting level indexed at 100%. The premium, if any, the averaging of the final price in accordance with the issue terms and the participation rates are not taken into account in calculating the share basket performance. The yields in accordance with the issue terms can deviate significantly from the index performance. Source: Bloomberg.

The presented figures describe previous yield or performance, and no reliable assumptions on future yield or value can be made based on them.

Yield table: Index-linked Bond Northern Europe

Change in the commodity basket according to the terms of the issue	Northern Europe Basic		Northern Europe Extra
	Issue price ca.	100%	Issue price ca.	110%
	Participation rate	75%	Participation rate	140%
	Value at maturity	Return p.a.	Value at maturity	Return p.a.
100%	175%	11.8%	240%	16.9%
75%	156%	9.3%	205%	13.3%
50%	138%	6.6%	170%	9.1%
25%	119%	3.5%	135%	4.2%
0%	100%	0.0%	100%	-1.9%
-25%	100%	0.0%	100%	-1.9%
-50%	100%	0.0%	100%	-1.9%

Simulated performance history

The graph shows the historical value of the investment at maturity, had the investment been made in accordance with the issue terms in January 2001–June 2006, and the yield on a direct investment in the share basket. The investment would have matured in January 2001–June 2011 (weekly observations). The yield on a direct investment has been calculated using one initial and closing value without averaging the final value. The share price performance of Fortum Corporation has been used instead of Neste Oil Corporation in January 2001–April 2005.

	Average value at maturity	Average annual return
„Basic“	145,9 %	7,8 %
„Extra“	185,7 %	11,0 %*
Direct investment	172,5 %	11,5 %

* 10% premium included in the yield calculation.

The presented figures describe previous yield or performance, and no reliable assumptions on future yield or value can be made based on them.

Issue terms in brief

Issuer	Nordea Bank Finland Plc; credit ratings Aa2 (Moody’s) and AA- (Standard & Poor’s).
Loan number and ISIN	Northern Europe Basic 4534A FI4000026828 Northern Europe Extra 4534B FI4000026836
Issue date	27 June 2011
Maturity	19 August 2016
Subscription period	27 June–19 August 2011
Places of subscription	Nordea Bank Finland Plc branches, Nordea Private Banking and Nordea Customer Service with access codes, tel 0200 70 000, Mon–Fri 10.00–16.30 (local network charge/mobile call charge), and Netbank at nordea.fi.
Subscription price	Basic 4534A: variable, about 100% Extra 4534B: variable, about 110%
Minimum subscription	1,000 euros
Yield at maturity	Basic 4534A: 75% of the rise of the share basket value in accordance with the issue terms Extra 4534B: 140% of the rise of the share basket value in accordance with the issue terms
Reference asset	Share basket (with equal weights): Bendrovė „Bloomberg“ „Adidas AG“ ADS GY „Bayer AG“ BAYN GY „BMW AG“ BMW GY „Heineken NV“ HEIA NA „Neste Oil Oyj“ NES1V FH „Novo Nordisk A/S“ NOVOB DC „Scania AB“ SCVB SS „Siemens AG“ SIE GY „Telenor ASA“ TEL NO `„Tieto Oyj“ TIE1V FH
Initial price	The closing values of the shares on 23 August 2011
Final price	Average of the shares' quarterly closing values from 5 August 2014 to 5 August 2016
Repayment of capital	The issuer Nordea Bank Finland Plc repays the nominal capital of the bonds in full at maturity irrespective of the performance of the share basket. The bonds involve a risk of the issuer’s repayment ability and of losing the premium (in Extra bond about 10%).
Security	The bonds are unsecured.
Structuring cost	The subscription price includes a structuring cost of about 0.9 % p.a. (see the terms of issue for more details). No separate subscription or management fee is charged on the bonds.
Secondary market	In normal market conditions the issuer Nordea Bank Finland Plc quotes a repurchase price for the bonds, which may be lower or higher than the nominal value.
Taxation	Possible index-linked yield is subject to tax at source on interest income for natural persons and Finnish death estates.
Safe custody	Free of charge with Nordea Bank Finland Plc.
Cancellation of the issue	The issuer has the right to cancel the issue based on changes in the economic circumstances or if the total amount of subscriptions is low, or if something should occur that the issuer considers might endanger the issue.
Listing	An application will be made for the bonds to be listed on NASDAQ OMX Helsinki.

Loans 4534A (Index-linked Bond Northern Europe Basic) and 4534B (Index-linked Bond Northern Europe Extra) under the MTN programme (a medium term note programme reported to the Finnish Financial Supervisory Authority from Sweden in accordance with the Prospectus Directive) of Nordea Bank AB (publ) and Nordea Bank Finland Plc, dated 25 May 2011. The bond-specific terms and the base prospectus are available at the places of subscription. Read the issue terms and the base prospectus before subscription. The Swedish version of the terms is binding and thus applied in possible dispute situations.

Nordea Markets is the name of the Markets departments of Nordea Bank Norge ASA, Nordea Bank AB (publ), Nordea Bank Finland Plc and Nordea Bank Danmark A/S.

The information provided herein is intended for background information only and for the sole use of the intended recipient. The views and other information provided herein are the current views of Nordea Markets on the date of this document and are subject to change without notice. This document is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.

The information provided herein is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information contained herein has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.

Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.

This document may not be copied, distributed or published for any purpose without the prior consent in writing of Nordea Markets.