New issue volume down more than 23% week over week; market backs from equities, eyes commodities

By Sheri Kasprzak

New York, March 6 - Structured products volume took a major hit during the week of Feb. 24, dropping 23.3% for offerings excluding exchange-traded notes, according to data collected by Prospect News.

Volume for the week of Feb. 24, excluding ETNs, was $888 million in 257 deals, down 23.3% from the week of Feb. 17, when $1.16 billion was sold in 159 deals.

Including ETNs, $1.04 billion was sold in 274 deals, down 27.82% from the previous week in which $1.44 billion was sold in 173 deals.

Volume was down in spite of the fact that the week of Feb. 24 was the last week of the month, excluding Friday, March 1.

Equity-linked deals dive

The story of the week seems to be a move away from notes linked to equities. For deals excluding ETNs, $608 million of them were linked to equities for the week, making up 68.49% of the deals, down 40.65% from the week of Feb. 17.

Meanwhile, one of the biggest positive changes for the week was synthetic commodity-linked securities, which surged by 627.74% week over week. Synthetic commodity-linked deals totaled $118 million for the week, representing 13.28% of all offerings excluding ETNs.

In fact, one of the major deals of the week was a synthetic commodities-linked deal from JPMorgan Chase & Co. The investment bank priced $86,148,000 of daily liquidity notes linked to the Dow Jones-UBS Commodity Index 3 Month Forward Total Return.

The second-largest deal came from RBC, which sold $27,095,000 of return optimization securities linked to the Russell 2000.

Smaller deals still rule

In terms of deal sizes, smaller offerings were still prevalent with 20 deals of $10 million and larger, compared to 31 the previous week. Only five deals were larger than $20 million, compared to 17 deals the previous week, and just one offering was larger than $50 million, compared to three deals the previous week.

JPMorgan leads bookrunners

For offerings excluding ETNs, JPMorgan Chase was the leading bookrunner, selling $212 million in 33 deals, making up 23.91% of the week's total. JPMorgan was number 12 the previous week, selling just $35 million in deals.

Morgan Stanley was the number-two bookrunner, selling $172 million in 31 deals, making up 19.32% of the week's total. The bookrunner was number six the previous week, selling $58 million in securities.

UBS rounded out the top three with $155 million of deals making up 17.5% of the week's total. The week before, the bookrunner sold $67 million in deals.

BofA Merrill Lynch, which took the top spot for the week of Feb. 17, dropped to number 11 during the week of Feb. 24, selling just $17 million in one offering.

Year-to-date totals drop

Looking to year-to-date totals, issuance has dropped by 38.84%. A total of $8.58 billion in 1,509 deals was sold from Jan. 1 to March 2, according to Prospect News data.

The previous year, during the same period, a total of $14.03 billion in 1,537 deals was sold.

Excluding ETNs, a total of $6.75 billion in 1,355 deals was sold year to date, compared to $6.34 billion in 2012 for the same period in 1,419 deals, an increase of 6.54% year over year.

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