Instalment warrants / instalments

Warrants give holders the right to buy the underlying shares or instrument by payment of several instalments (usually two) during the life of the warrant. The Final payment is usually between 40% and 60% of the price of the underlying instrument at the time of issue. Instalment warrants are often covered warrants with the underlying asset being held in trust / custody for the benefit of the holder. A common feature of instalment warrants is that the holder is entitled to any dividends or distributions and possibly franking credits paid by the underlying asset during the life of the warrant. An interest component is usually part of the payments due.