Barclays prices another $500 million in two iPath add ons; J.P. Morgan sells notes for Merrill Lynch

By Sheri Kasprzak

New York, Jan. 24 - Barclays Bank plc's iPath exchange-traded notes again grabbed structured products headlines Wednesday as the investment bank priced another $250 million of the notes linked to the Dow Jones - AIG Commodity Index Total Return and $250 million of the notes linked to the GSCI Total Return index.

The notes, one market source said Wednesday, are popular because of their similarity to exchange-traded funds.

"It's fair to say investors like them because they're like ETFs," he said. "They're transparent. Investors like to know what they're getting."

Another market source said the amount of the notes sold so far alone tells of their popularity.

"It's gotten huge, hasn't it?" he asked. "I think the amount they've managed to sell speaks volumes about how popular they are."

The Structured Products Association's Keith Strycula has said recently that he likes Barclay's iPath notes because they are like exchange-traded funds and because the fees associated with them are transparent.

Deal terms

The latest pricing brings to $1.5 billion the principal of the AIG notes sold so far. On Dec. 26, the company issued $250 million, on Nov. 28 it priced $500 million and on Oct. 3, it sold $250 million.

The 30-year 0% notes pay par of $50.00 multiplied by the index factor, which is the closing value of the index on the final valuation date divided by the initial level minus the investor fee.

The fee is 0.75% of par per year multiplied by the index factor and divided by 365.

Meanwhile the GSCI issue has reached $750 million. Barclays previously priced $500 million principal amount of the notes to settle on June 9, 2006.

The 30-year 0% notes pay par of $50.00 multiplied by the index factor, which is the closing value of the index on the final valuation date divided by the initial level minus the investor fee.

Merrill prices S&P-linked notes

Meanwhile, J.P. Morgan Securities Inc. again distributed notes for another investment bank - this time for Merrill Lynch &Co., Inc.

Merrill Lynch sold $16.735 million in 0% buffered return enhanced notes linked to the S&P 500 index.

Payout at maturity on the 18-month notes will be double any positive return on the index up to 14.4%. The investors stand to lose 1.1111% for every 1% the index drops beyond 10%.

On Tuesday, Barclays priced $11.185 million in 0% annual review notes linked to the S&P 500 index that will be distributed by J.P. Morgan.

The terms of the notes priced for Barclays have remarkably similar terms as the buffered return notes J.P. Morgan is pricing for Merrill Lynch.

J.P. Morgan has sold several offerings recently for rival Morgan Stanley.

Merrill's Nikkei notes

In other news at Merrill Lynch, the company plans to price 0% accelerated return notes linked to the Nikkei 225 index.

The one-year notes pay triple any gain in the index at maturity capped at between $12.70 and $13.10 per note. Investors are exposed to any losses on the index.

The notes are set to close in March.

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