Investment banks price multiple offerings of same products

By Sheri Kasprzak

New York, Aug. 2 - Several investment banks have announced plans to price several offerings of the same types of notes linked to the same indexes this week and market insiders said the popularity of those structures may be at the core.

"It seems logical to me that several investors have voiced an interest in those particular structures," said one market insider whose investment bank was not among those offering these multiple deals.

"The investors really are at the core of what's out there," said another. "When they investors ask for it, that's what we come up with. You have certain structures and certain indexes that are just more popular than others."

Svenks, JPMorgan among banks

Among those offerings were two enhanced outperformance notes from AB Svensk Exportkredit linked to a basket of stocks and the S&P Consumer Select Sector Index via Goldman Sachs & Co.

Svensk priced $69.891 million in outperformance notes and $36.161 million of enhanced outperformance notes.

Both tranches have a 14-month maturity and are linked to a short position of 57 common stocks within the S&P Consumer Discretionary Select Sector Index, excluding stocks from the automotive, housing and media industries that are subject to announced mergers versus a long position in the S&P Consumer Staples Select Sector Index.

For the $69.891 million outperformance notes, the payout at maturity will be par plus the amount, if any, by which the index return is greater than the stock basket return. Investors will lose 1% for each 1% that the stock basket return exceeds the index return.

For the $36.161 million enhanced outperformance notes, the payout at maturity will be par plus double the amount, if any, by which the index return is greater than the stock basket return, subject to a maximum return of 36%. Investors will lose 1% for each 1% that the stock basket return exceeds the index return.

Morgan Stanley's notes

Recently, Morgan Stanley priced $55.511 million, $73.898 million and $10.682 million in zero-coupon annual review notes linked to the S&P 500 index through JPMorgan Chase Bank, NA and J.P. Morgan Securities Inc.

All of those notes have a three-year term and will be called at increasing premiums if the index is at least 95% of it initial level on the first annual review date and at or above its initial level on the second or third annual review dates.

The redemption amount on the $55.511 million in notes will be par plus 9.89% if the notes are called on Aug. 5, 2008; par plus 19.78% if called on Aug. 5, 2009; and par plus 29.67% if called on Aug. 5, 2010.

In the $73.898 million in notes will be called at increasing premiums if the index is at or above its initial level on the annual review date. The redemption amount is par plus 10.67% if the notes are called on Aug. 5, 2008; par plus 21.34% if called on Aug. 5, 2009; and par plus 32.01% if called on Aug. 5, 2010.

The $10.682 million of notes will be called at increasing premiums if the index is at least 90% of its initial level on the first annual review date and at or above its initial level on the second or third annual review dates. The redemption amount will be par plus 8.99% if the notes are called on Aug. 5, 2008, par plus 17.98% if called on Aug. 5, 2009 and par plus 26.97% if called on Aug. 5, 2010.

For all three, assuming the notes are not called, the payout will be par unless the index declines by more than 10%, in which case investors will lose 1.1111% for each 1% decline beyond 10%.

Other deals

Elsewhere, JPMorgan Chase & Co. said it plans to price lesser-index principal-protected senior notes linked to the Nikkei 225 and S&P 500 indexes.

Earlier this week, Deutsche Bank AG, London Branch announced plans to price two zero-coupon, 100% principal-protected absolute return barrier notes linked to the S&P 500 index.

The six-month notes will pay par plus the absolute value of the index return, assuming the index never closes above the upper index barrier or below the lower index barrier during the life of the notes.

The upper and lower index barriers will be 21.5% and 23.5% for one of the notes and 19% and 21% for the other notes.

© 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.