Barclays plc paves road in iPath exchange-traded notes; ABN Amro sells four Thornburg deals

By LLuvia Mares

New York, Sept. 21 - Barclays plc marked $3 billion in market capitalization for its iPath exchange-traded notes and so far not many have taken advantage of the path Barclays has paved - but others are on the way, said Keith Styrcula, Structured Products Association chairman said others are on their way.

Barclays said Thursday that the iPath program has grown to eight issues since the first two iPath ETNs were launched in early June 2006.

"There is a regulatory issue that Barclays took advantage of and that is that their guys were a lot more forward thinking and were able to push the change to their shelf much more quickly than other issuers because you have to issue 30-year paper," said Styrcula.

"Barclays was a first mover in this business, and there is a huge advantage of being a first mover.

"They were able to pull together $3 billion in assets in just a little bit over a year within an entirely new investment. They should be applauded for that."

The iPath ETNs have a 30-year maturity and are senior debt securities linked to the performance of a market benchmark or strategy.

"iPath is a paragon of innovation simplicity and giving the market what it wants - liquid transparent structured products," Styrcula said.

iPath ETNs are issued by Barclays Bank plc via agent Barclays Capital Inc., with Barclays Global Investors Services as the promoter of iPath ETNs to intermediaries.

The first two iPath ETNs are linked to commodity indexes, the Dow Jones-AIG Commodity Index Total Return and the S&P GSCI Total Return index. The third iPath ETN is linked to the S&P GSCI Crude Oil Total Return index.

The fourth iPath ETN is linked to the MSCI India index, which is designed to measure the market performance, including price performance and income from dividend payments, of Indian equity securities.

In May, the first iPath ETNs designed specifically to offer exposure to a single-currency exchange rate relative to the dollar were launched, as well as the first iPath ETN to offer investors exposure to the CBOE S&P 500 BuyWrite index.

Styrcula said other banks set to follow the golden-paved road include Goldman Sachs, Bear Stearns, Deutsche Bank, among others.

ABN's Thornburg transactions

In other news, ABN Amro Bank NV priced its fourth deal in a week linked to Thornburg Mortgage, Inc.

ABN Amro on Friday announced $1.5 million of 26% Knock-In Reverse Exchangeable notes due Sept. 24, 2008 linked to Thornburg.

"It's an extremely high coupon so it's almost as if the investors are taking a short-term bet," said a market observer. "The market seems to be reacting positively to the coupon on this particular underlying name."

Payout at maturity will be par in cash unless Thornburg Mortgage stock falls below the protection price of $7.43, 55% of the initial price of $13.50, during the life of the notes and finishes below the initial price in which case the payout will be 74.074 shares of Thornburg Mortgage stock.

The company also announced a second deal Friday, pricing $2.3 million of 26% Knock-In Reverse Exchangeable notes due Sept. 25, 2008 linked to Thornburg.

"It's not for the faint-hearted," said the market source about deals linked to Thornburg.

But he added: "Because with Thornburg Mortgage there is a significant follow-on interest that is allowing the guys at ABN Amro to print a series of follow-on transactions pretty impressively."

Payout at maturity will be par in cash unless Thornburg Mortgage stock falls below the protection price of $8.02, 60% of the initial price of $13.36, during the life of the notes and finishes below the initial price in which case the payout will be 74.850 shares of Thornburg Mortgage stock.

ABN Amro Inc. is the agent.

Previous deals had a 28% coupon and a 55% threshold, sized at $1.5 million, and a 28% coupon and a 60% threshold, sized at $1.2 million.

Eksportfinans sells $14.53 million basket notes

Eksportfinans ASA has been extremely busy in the market lately, according to some market sources.

On Friday, the company priced $14,525,000 of 0% capped principal-protected notes due June 1, 2009 linked to the S&P 500 with a 60% weight, the MSCI EAFE index with a 30% weight and the iShares MSCI Emerging Markets index with 10% weight, according to an FWP filing with the Securities and Exchange Commission.

"Eksportfinans is the most forward thinking issuer in the U.S. as a non-U.S. entity," said a market analyst. "So their name is coming out quite a bit."

Goldman, Sachs & Co. is the agent.

"I know that they have been working hard to get that program up and running," said the analyst regarding Goldman.

The payout at maturity will be par plus any basket return, subject to a maximum return of 10%. Investors will receive at least par.

Also during the past week, Eksportfinans priced reverse convertibles linked to Force Protection, Inc., Oshkosh Truck Corp., Centene Corp., Rowan Cos., Inc., Charles Schwab Corp., General Motors Corp., Goldman Sachs Group Inc., Goodyear Tire & Rubber Co., Hertz Global Holdings Inc., InterOil Corp., MetroPCS Communications, Inc., Merrill Lynch & Co., United States Steel Corp. and Williams Cos. Inc. plus a Swiss franc-denominated issue of mandatory exchangeable notes linked to ABB Ltd.

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