Lehman Brothers prices $100 million product linked to Microsoft, Cisco; LaSalle active with Rabo deals

By Kenneth Lim

Boston, Feb. 13 - Lehman Brothers Holdings Inc. led the structured products market with a $100 million offering of notes linked to a basket of Microsoft Corp. and Cisco Systems Inc. common stock.

Meanwhile, LaSalle Bank is placing a number of deals for Rabo Financial Products NV with books expected to close next week.

Lehman prices $100 million deal

Lehman Brothers is offering $100 million of 0.25% medium-term notes due Feb. 16, 2012 linked to an equally weighted basket of Microsoft and Cisco common stock.

At maturity, the notes will pay par plus the return on the basket if the stock basket exceeds the threshold value of 104.77% of the principal on Feb. 13, 2012, payable in stock or cash at Lehman's option. Otherwise, investors will receive par.

The notes may be called after the first two years, and if redeemed before maturity will return at the same current rate as the basket. The notes may also be put before maturity.

A Lehman source described the offering as "a big deal."

"It's a pretty straightforward deal," the source said. "The client is interested in creating a synthetic product, and we help them to create it and they'll buy into the notes."

The source said demand should be robust for the product.

"The interest is fairly strong in general...most of these usually do not go to retail investors, although there may be some down the road that will be targeted at retail investors."

LaSalle places deals for Rabo

LaSalle was also active on Tuesday, launching a number of products for Rabo.

Three of the deals are knock-in reverse convertibles. They are a series of 10% six-month reversibles linked to Dell Inc. with an 85% knock-in threshold, a series of 14.2% six-month reversibles linked to Harmony Gold Mining Co. Ltd. with an 80% knock-in and a series of 19% three-month reversibles linked to NutriSystem Inc. with an 80% knock-in.

Through LaSalle, Rabo is also selling 5.5-year principal-protected zero-coupon certificates of deposit linked to a basket of stock indexes. The basket comprises equal weights of the Standard & Poor's 500, the Dow Jones Euro Stoxx, the Nikkei 225 and the MSCI Taiwan indices. The certificates offer a 10% minimum return and a 100% participation rate in the basket performance.

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