Barclays prices $250 million more iPath notes linked to AIG index; Lehman negotiates News Corp. notes

By Sheri Kasprzak

New York, Dec. 21 - After pricing $500 million in iPath exchange-traded notes linked to the MSCI India Total Return Index earlier in the week, Barclays Bank plc again grabbed headlines with word that it priced another $250 million in iPath notes linked to the Dow Jones - AIG Commodity Index Total Return.

The 0%, 30-year notes are in addition to $1 billion in the notes issued in June, October and November.

ETNs may be the wave of the future for structured products, at least according to the Structured Products Association's Keith Styrcula.

Styrcula said in a recent interview that the notes offer investors access to a "desirable market" that may otherwise be out of their reach.

Expenses are also a measure of how successful they might be.

Another market source said Thursday that compared to a mutual fund, the investors would be better off going with an exchange-traded note.

"The cost is very reasonable compared to a mutual fund," he said. "Not to mention, the fee is going to be transparent. You have a better sense of exactly what you're getting."

Terms of the add-on

The $250 million add-on at maturity pays par of $50.00 multiplied by the index factor, equal to the closing value of the index on the final valuation date divided by the initial level, minus the fee. The investor fee is 0.75% of par per year, multiplied by the index factor and divided by 365.

As previously mentioned, on Tuesday, Barclays priced $500 million in exchange-traded notes linked to the MSCI India Total Return Index with terms similar to the AIG-linked notes. The MSCI India notes also have a 30-year term. The fee for those notes is equal to 0.89% of par per year, multiplied by the index factor and divided by 365.

Investors buying in

Connected to the recent surge of exchange-traded notes from Barclays, the company commented Thursday on investments in their exchange-traded notes surpassing $1 billion.

The bank announced Wednesday that investments in its iPath Exchange Traded Notes surpassed $1 billion.

"It's not the value [of the exchange-traded notes] that has risen to $1 billion, but more investors have been buying iPath, which got us to that level," said Kristin Friel, a spokeswoman for Barclays, in an interview Thursday.

When asked if the timing of the announcement was related to the $500 million in MSCI India Total Return Index notes, also announced Wednesday, Friel said that was just a coincidence.

From June through November, Barclays issued $1 billion in iPath exchange-traded notes linked to the Dow Jones - AIG Commodity Index Total Return. The notes were issued in three offerings of $500 million principal amount in June, $250 million principal amount in October and $250 million principal amount in November. A further $250 million principal amount was announced Wednesday for settlement on Dec. 26.

Lehman's News Corp. notes

Elsewhere in structured products news Thursday, Lehman Brothers Holdings Inc. negotiated the terms of a $50 million offering of 0.45% notes linked to News Corp.

The seven-year notes pay par plus the return on the stock at maturity if New Corp.'s share price exceeds the threshold value on the maturity date. The threshold value is $23.7193, or 110.22% of $21.52, the average execution price per share Lehman paid to hedge the notes.

Otherwise, investors get par at maturity.

The offering includes a $7.5 million greenshoe.

On Thursday, News Corp.'s stock closed down 4 cents at $22.52 (NYSE: NWS).

© 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.