National Grid 2008 Annual Report Download - page 117

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 57289
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.5.1, Doc: 4, Page: 21
Description: EXH 2(B).5.1
0/1500.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/500/1*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 57289
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.5.1, Doc: 4, Page: 21 Description: EXH 2(B).5.1
0/1500.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/500/1*
Index Linked Instruments and Dual Currency Instruments
The Issuer may issue Instruments with principal or interest determined by reference to an index or formula, to chan
g
es in the
prices of securities or commodities, to movements in currency exchange rates or other factors (each, a “Relevant Factor”). In
addition, the Issuer may issue Instruments with principal or interest payable in one or more currencies which may be different
from the currency in which the Instruments are denominated. Potential investors should be aware that:
Partly-paid Instruments
The Issuer may issue Instruments where the issue price is payable in more than one instalment. Failure to pay any subsequent
instalment could result in an investor losing all of its investment.
Variable rate Instruments with a multiplier or other leverage factor
Instruments with variable interest rates can be volatile investments. If they are structured to include multipliers or other levera
g
e
factors, or caps or floors, or any combination of those features or other similar related features, their market values may be
even more volatile than those for securities that do not include those features.
Fixed/Floating Rate Instruments
Fixed/Floatin
g
Rate Instruments may bear interest at a rate that the Issuer may elect to convert from a fixed rate to a floatin
g
rate, or from a floating rate to a fixed rate. The Issuer’s ability to convert the interest rate will affect the secondary market and
the market value of such Instruments since the Issuer may be expected to convert the rate when it is likely to produce a lower
overall cost of borrowin
g
. If the Issuer converts from a fixed rate to a floatin
g
rate, the spread on the Fixed/Floatin
g
Rate
Instruments may be less favourable than the prevailin
g
spreads on comparable Floatin
g
Rate Instruments tied to the same
reference rate. In addition, the new floatin
g
rate at any time may be lower than the rates on other Instruments. If the Issuer
converts from a floating rate to a fixed rate, the fixed rate may be lower than the prevailing rates on its Instruments.
Instruments issued at a substantial discount or premium
The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in
relation to general changes in interest rates than do prices for conventional interest-bearin
g
securities. Generally, the lon
g
er the
remaining term of the securities, the greater
21
(i) the market price of such Instruments may be volatile;
(
ii
)
the
y
ma
y
receive no interest;
(iii) payment of principal or interest may occur at a different time or in a different currency than expected;
(
iv
)
the amount of
p
rinci
p
al
p
a
y
able at redem
p
tion ma
y
be less than the nominal amount of such Instruments or even zero;
(v) a Relevant Factor may be subject to si
g
nificant fluctuations that may not correlate with chan
g
es in interest rates,
currencies or other indices;
(vi) if a Relevant Factor is applied to Instruments in conjunction with a multiplier
g
reater than one or contains some other
levera
g
e factor, the effect of chan
g
es in the Relevant Factor on
p
rinci
p
al or interest
p
a
y
able likel
y
will be ma
g
nified; and
(vii) the timin
g
of chan
g
es in a Relevant Factor may affect the actual yield to investors, even if the avera
g
e level is consistent
with their ex
p
ectations. In
g
eneral, the earlier the chan
g
e in the Relevant Factor, the
g
reater the effect on
y
ield.