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Break Even Instruments

Break Even Instruments

Break Even trading is available for German and French inflation linkers.

From a financial point of view, Break Even instruments are a combination of trades between an inflation-linked bond and a nominal bond.

The purchase of Break Even instruments means the purchase of an inflation-linked bond and the simultaneous sale of a nominal bond.

Thereby, the volume of the Break Even transaction corresponds to the trading volume of the inflation-linked bond.

Calculation

The trade volume of the nominal bond shall be defined by the ratio of the two ‘basis point values’.

The ratio of the basis point values (PVO1 inflation-based : PVO1 nominal bond = ratio of two trading volumes) determines the trade volume of the nominal bond.

After calculation, the amount of the nominal bond will be rounded to the nearest million. (If the smallest tradable unit in Break Even instruments of one million is admitted, the volume of the traded nominal bond shall be rounded up to EUR 100,000).