RBC prices two high-coupon reverse convertibles linked to Tesla Motors, Green Mountain Coffee

By Sheri Kasprzak

New York, Oct. 17 – Amid the higher-coupon offerings hitting the structured products marketplace, Royal Bank of Canada announced two on Friday: one 11% reverse convertible note linked to Tesla Motors Inc. and one 12% reverse convertible note linked to Green Mountain Coffee Roasters Inc.

Stocks have been volatile recently as a difficult earnings season continues.

The $500,000 Tesla Motors bonds have a due date of Jan. 21, 2015. Looking to the company’s stock performance over the past three months, the shares hit a high of about $285.00 and sank down to $225.00 in early October. On Friday, shares of Tesla Motors rose $1.13 to close at $227.48.

The $500,000 Green Mountain notes are also due Jan. 21, 2015. Shares of Green Mountain hit a three-month high of $144.00 in early October and have been sinking since. On Friday, the stock was down $0.27 to close at $137.71.

Payout

Looking to the Tesla Motors note terms, the payout at maturity will be par in cash unless Tesla Motors shares fall below the protection price of $160.79, 70% of the initial price of $229.70, during the life of the notes and finish below the initial price, in which case the payout will be a number of Tesla Motors shares equal to $1,000 principal amount divided by the initial price.

The payout at maturity on the Green Mountain notes will be par in cash unless Green Mountain shares fall below the protection price of $111.69, 80% of the initial price of $139.61, during the life of the notes and finish below the initial price, in which case the payout will be a number of Green Mountain shares equal to $1,000 principal amount divided by the initial price.

RBC Capital Markets is the agent for both of the notes.

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