Deutsche plans absolute return linked to Russell 2000, prices $5.83 million tied to Nikkei

By LLuvia Mares

New York, Jan. 2 - Leading structured products news, Deutsche Bank AG, London Branch plans to price zero-coupon 100% principal protection absolute return barrier M-notes due July 29, 2009 linked to the Russell 2000 index.

"The absolute return notes linked to Russell 2000 are designed for investors who are uncertain about the direction of the market," said a market source.

"As long as the market does not move too much, investors have an opportunity to receive an absolute return in either up or down markets. On the other hand, if the markets have a significant move in either direction and one of the barriers is breached, investors receive back their full investment.

"If you look at such products historically, the barriers are broken quite frequently (primarily the upper barrier), which means that investors should be prepared to forego any interest," he said.

"And even when the underlying index remains within the specified range, there is a possibility that the return could be below a comparable money market return. Nevertheless, for investors who are willing to forego interest payments and believe that the markets will remain range bound, this type of product, if priced competitively, can be an interesting alternative to fixed income."

If the index ever closes above or below its initial level by more than the absolute return barrier, the payout at maturity will be par.

Otherwise, the payout will be par plus the absolute value of the index return.

The absolute return barrier is expected to be between 26.25% and 29.25%. The exact barrier will be set at pricing.

The notes are expected to price on Jan. 24 and settle on Jan. 29.

Deutsche Bank Securities Inc. is the agent.

Deutsche prices $5.83 million optimization securities

In a different product, Deutsche Bank AG, London Branch also priced $5.83 million of 0% return optimization securities due June 30, 2009 linked to the Nikkei 225 index.

The payout at maturity will be par of $10 plus five times any index gain, subject to a maximum return of 33.5%. Investors will be fully exposed to any index decline.

UBS Financial Services Inc. and Deutsche Bank Securities Inc. are the agents.

UBS to price notes on Asian currencies

Once again, notes linked to Asian currencies are making an appearance in the new year.

UBS AG announced plans to price zero-coupon 100% principal protection notes due Jan. 29, 2010 linked to a currency basket.

Market sources said they expect to see an increase in these types of structures.

The basket includes equal weights of the Indonesian rupiah, the Indian rupee, the Chinese renminbi and the Philippine peso, all against the dollar.

At maturity, investors will receive par plus any positive return on the basket times a participation rate that will be between 145% and 195%. The participation rate will be set at pricing.

Investors will receive at least par.

The notes are expected to settle on Jan. 31.

UBS Financial Services Inc. and UBS Investment Bank are the underwriters.

UBS plans notes linked to UBS Bloomberg index

In a similar but separate deal, UBS AG made market sources' predictions of increased interest in principal protected notes linked to commodities a reality after it announced plans to price zero-coupon 100% principal protection notes due April 30, 2012 linked to the UBS Bloomberg Constant Maturity Commodity index.

The payout at maturity will be par plus any gain on the index times a participation rate that will be at least 100%. The exact participation rate will be set at pricing.

Investors will receive at least par.

The notes are expected to price on Jan. 24 and settle on Jan. 31.

UBS Investment Bank is the underwriter.

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