Merrill prices $147 million notes linked to Asian equity indexes, $88 million in notes linked to Topix

By Sheri Kasprzak

New York, Feb. 7 - Merrill Lynch & Co., Inc. grabbed structured products headlines with several large note offerings Wednesday.

The deals were led by a $147 million offering of 0% Accelerated Return Notes linked to a basket of Asian equity indexes.

The notes capitalize on the recent gains in several Asian indexes, said one market source when asked about them Wednesday afternoon.

"Investors are taking advantage of it [improved Asian stocks]," he said. "I'm sure there will be more where this came from and we're working on some as well."

The market source said he could not elaborate on the indexes that would be offered in his firm's upcoming deals.

"I will say the Nikkei is one to watch," he added.

Merrill deal includes Nikkei, Xinhua

The Merrill basket includes equal weights of the Nikkei 225 and the FTSE/Xinhua China 25 indexes.

The notes pay par plus triple any gain on the basket with a cap of $12.43 per $10.00 unit. Investors are exposed to any decline in the indexes.

Earlier this week, HSBC USA Inc. announced plans to price Far East equity buffer notes linked to a basket of indexes that included the Nikkei 225, the Hong Kong Seng China Enterprises, the MSCI Taiwan and the MSCI Singapore Free indexes.

Looking ahead, JPMorgan Chase & Co. intends to price 0% buffered return enhanced notes linked to the Nikkei on Feb. 9, Deutsche Bank, London Branch plans to price 0% performance securities linked to the index on Feb. 22 and UBS AG will price 0% return optimization securities linked to the Nikkei on Feb. 22.

Merrill's Topix Small Cap-linked notes

In another offering connected to Asian stocks, Merrill priced $88 million in 0% Accelerated Return Notes linked to the Topix Small Cap index.

Those 14-month notes pay par plus triple any gain on the index capped at $12.925 per $10.00 unit. Investors will share in any declines in the index.

The Topix Small Cap index measures the performance of the stocks listed on the first section of the Tokyo Stock Exchange.

Merrill plans S&P notes

The investment bank also priced $87 million in 0% Accelerated Return Notes linked to the S&P 500 index.

Those notes also pay triple any gain on the index, capped at $11.20 per $10.00 in principal and investors also have exposure to any declines.

The S&P-linked notes are due in 14 months.

The S&P 500 is a popular index looking forward. Barclays Bank plc intends to price 0% annual review notes linked to the index through J.P. Morgan Securities Inc. on Feb. 9 and 0% Super Track Notes linked to the index on Feb. 9. Deutsche Bank Securities Inc. plans to price 0% index+ notes linked to the S&P 500 on Feb. 23, Hartford Life Insurance Co. intends to price 0% principal-protected notes linked to the index on Feb. 14 and another issue of 0% principal-protected notes linked to the index on Feb. 14 through Bear, Stearns & Co.

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