Goldman to sell $13 million in 0% principal-protected notes linked to WTI crude oil

By Sheri Kasprzak

New York, March 2 - Goldman Sachs & Co. rounded out the week in structured products announcing its plans to price $13 million in zero-coupon principal-protected notes linked to West Texas Intermediate crude oil futures on behalf of AB Svensk Exportkredit.

Principal protection, according to market sources reached Friday, is an asset several investors are flocking to following a major dive in the stock market earlier this week.

"There seems to have been an explosion of interest in principal-protected notes this week," said one market source.

"That's pretty rare. It's definitely a function of the market drop. I'm not sure how long it will last since principal protected deals are not the norm in this market."

Another equity structurer based out of New York agreed.

"The interest is out there [for principal-protected offerings]," he said. "This March we'll be seeing more and more."

On Friday, the drop in stocks continued with the Dow Jones Industrial Average giving up another 120.24 to close at 12,114.10. The Nasdaq composite index fell 36.21 to close at 2,368 and the Standard & Poor's 500 composite index dipped 16 to end at 1,387.17.

Terms of Goldman offering

Moving back to those principal-protected notes linked to WTI crude oil futures, the offering comes as oil prices dropped 36 cents to close at $61.64 per barrel.

The five-year notes, which are set to price March 5, pay par of $10,000 plus any increase in the oil futures contract multiplied by the participation rate - expected to be 117.5%, to be determined at pricing. Investors can expect to receive at least par at maturity.

Other crude oil offerings

In other structured products news related to crude oil, Lehman Brothers Holdings Inc. upsized to $600,000 its previously announced issue of single-barrier synthetic bearish reverse convertibles linked to the price of light sweet crude oil on Thursday.

The issue was upsized from $500,000 and the notes pay par at maturity plus a fixed return of 6.6% as long as crude oil stays below the upper barrier of $86.506 or 140% of the initial price of $61.790 for the life of the notes. If crude oil prices rise above the barrier, payout will be par plus the fixed return minus the percentage gain in crude oil.

Looking forward, Morgan Stanley plans to price 0% capital-protected notes linked to, among other things, WTI light sweet crude. The basket also includes the Goldman Sachs Commodity Agricultural Index - Excess Return, the Goldman Sachs Commodity Index - Gold Excess Return, grade A copper, primary nickel and special high-grade zinc.

Finally, Morgan Stanley plans to price 0% Performance Leveraged Upside Securities linked to the Goldman Sachs Crude Oil - Excess Return.

Other principal-protected deals

Elsewhere in principal-protected offerings, Barclays Bank plc said it plans to price zero-coupon principal-protected notes linked to the S&P 500 index.

The 15-month notes are set to price March 27. If the index finishes within a preset range, payout at maturity will be par plus 11.25%, the conditional return rate. The range's lower barrier is the initial level minus 13% and the upper barrier is the initial level plus 13%. Investors will receive at least par.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.