PERLS - Principal Exchange Rate- Linked Securities

A variation on a dual currency bond which pays both coupon and principal in the base currency, but the variable principal payment is set according to a redemption formula which links it to movements in currency exchange rates between the issue date and maturity. PERLS' principal payments increase as the foreign currency appreciates relative to the base currency and decrease as the foreign currency declines. Reverse Principal Exchange Rate-Linked Securities' (Reverse PERLS') principal payments increase as the base currency appreciates relative to the foreign currency and decrease as the base currency depreciates.