Instalment warrants are a class of fully-covered equity warrant which allow you to increase your exposure to the share market by purchasing in two seperate payments. They are more akin to purchasing shares with borrowed funds. Instalment warrants operate in a similar manner to ordinary warrants with two major differences. Firstly, the holder of the instalment is entitled to receive the dividends and any franking credits payable on the underlying asset and secondly, the initial capital outlay is likely to be higher for an instalment than for an ordinary warrant. The instalment holder pays for the underlying asset in two seperate payments, the second being fixed. A rolling instalment warrants works is the same manner except that the issuer has the right to reduce the loan. They in effect go to the market and purchase the underlying security and effectively loan you a premium so that you may receive the dividends etc.
