A long-dated FX product that aims to enhance yield for yen investors (those with yen-denominated investments). The note is based on the USD/ JPY interest rate differential. Investors swap yen LIBOR for dollar LIBOR (or any dollar interest rate benchmark) with payment being defined in terms of a notional amount denominated in yen. In general, a reverse dual currency note pays a foreign interest rate in the investor’s domestic currency. With a power reverse dual currency note, return can be enhanced (and a borrower, also, may secure a lower rate) by taking advantage of the interest rate differential between two currencies in question. More specifically, the power added to this note implies higher initial coupons, with coupons rising as the domestic/foreign exchange rate depreciates. However, the power feature brings about a higher degree of risk for the investor. Therefore, investors tend to place a digital cap on the rate so that the rate can be locked once it hits a certain threshold. This note (PRDC note, for short) has very long maturities (up to 30 years).

There are some variations on this product including trigger power reverse dual currency notes (trigger PRDC notes) and callable power reverse dual currency notes (callable PRDC notes).