UBS plans notes linked to currencies, notes linked to commodities

By LLuvia Mares

New York, Jan. 04 - Leading structured products news, UBS AG plans to price zero-coupon 100% principal protection notes due Jan. 29, 2010 linked to a currency basket.

"There have been quite a few of these [structures] coming in," said Suzi Hampson of Future Value Consultants.

"Since we've been following them we've noticed there has been a bit of constant flow with these Asian currencies. And this structure seems to be quite a common structure. You have principal protection, high participation rate between 145% and 195% and I think it will keep turning them out."

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 commodities

In a separate issue, UBS AG to price zero-coupon 100% principal protection notes due April 30, 2012 linked to the UBS Bloomberg Constant Maturity Commodity index.

Commodity-linked deals are also gaining in popularity "and have become quite common as well," Hampson said.

"Both [the UBS and the recent Deutsche deal] structures are similar products, both principal-protected and linked to one of their own indices. It shows that both providers are doing the same thing. It's great for an investor looking to invest in a commodity...without any risk to the capital. We will continue to see these types of structures."

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.

Deutsche to price notes linked to commodities

In a similar deal, Deutsche Bank AG, London Branch plans to price zero-coupon 100% principal-protected notes due Jan. 31, 2013 linked to the Deutsche Bank Liquid Commodity Index - Optimum Yield Excess Return.

"This is great for the investor looking to invest without any risk involved," said Hampson. "There seems to be a constant flow of these products so I would assume it will continue."

The Deutsche Bank Liquid Commodity Index - Optimum Yield Excess Return reflects the performance of a basket of futures contracts relating to six commodities and measures the value of this basket by tracking the closing prices of certain exchange traded contracts for the future delivery of each of these commodities. The commodities included are West Texas Intermediate light sweet crude oil, New York Harbor No. 2 heating oil, high grade primary aluminum, gold, corn and wheat.

The payout at maturity will be par plus any index gain multiplied by a participation rate that will be determined at pricing and is expected to be 100% to 120%. Investors will receive at least par.

The notes are expected to price Jan. 28 and settle Jan. 31.

Deutsche Bank Securities Inc. and Deutsche Bank Trust Co. Americas will be the agents.

Lehman plans barrier notes linked to S&P 500

In other news, Lehman Brothers Holdings Inc. plans to price an issue of zero-coupon 100% principal-protected absolute return barrier notes due July 31, 2009 linked to the S&P 500 index.

"I think we have seen quite a lot of barrier notes since I've been back after Christmas," she said.

"I've seen a lot of these and they don't seem to be slowing down. It's a very popular structure and linked to the S&P 500, which is the most common index."

UBS Financial Services Inc. and Lehman Brothers Inc. are the underwriters.

If the index ever closes above the upper index barrier or below the lower index barrier, investors will receive par at maturity. The upper and lower index barriers are expected to be between 25.15% and 28.15% of the initial level, with the exact barrier levels to be determined at pricing.

If the index stays within the barriers, the payout at maturity will be par plus the absolute value of the index return.

The notes are expected to price Jan. 28 and settle Jan. 31.

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