RBC to price 14.35% reverse convertibles linked to Marvell; higher coupons seen in reverse convertibles

By Sheri Kasprzak

New York, Feb. 14 - Royal Bank of Canada led structured products news Wednesday with a 14.35% reverse convertible linked to Marvell Technology Group Ltd.

The offering is one of several large-coupon offerings linked to a tech stock and one market source said investors are looking for bigger coupons in higher-volatility sectors like technology.

"Folks are getting greedy," joked the market source when asked about the higher coupons.

"They're going where the volatility is and at this point that includes tech. It's really where the money is. Investors are hoping to make a big return."

Another market source said he feels larger coupons are going to become more common.

"It will be in the volatile [sectors]," he added. "But I do think we're going to see bigger coupons."

RBC details

Under the one-year RBC notes, set to price Feb. 23, investors will receive par at maturity unless Marvell's stock falls below the 70% barrier price during the life of the notes and finishes below the initial share price. In that case, the investors will receive a number of shares equal to $1,000 divided by the initial share price or the cash equivalent at RBC's option.

RBC also announced plans Wednesday to price 10% reverse convertibles linked to Sirius Satellite Radio.

Other large-coupon deals

ABN Amro Bank NV priced Wednesday $1.39 million in 15.75% knock-in reverse exchangeable offering linked to Nymex Holdings, Inc.

The one-year notes pay par at maturity unless the stock closes below the knock-in price of $101.60 during the life of the notes and finishes below the initial share price. Investors will then receive 7.874 shares of Nymex.

ABN Amro also plans to sell 22.5% reverse exchangeables linked to JetBlue Airways Corp.

The three-month JetBlue notes pay par unless the stock falls below the 80% knock-in level and ends below the initial stock price. In that occurrence, payout will be a number of shares $1,000 divided by the initial share price.

The investment bank priced $1.55 million in 16.5% in knock-in reverse exchangeables linked to JetBlue in late January.

Earlier this month, ABN Amro announced plans to price 24% reverse convertibles linked to XM Satellite Radio Holdings Inc. and 14.5% reverse convertibles linked to Apple Inc. Both of those notes are set to price Feb. 23.

On Tuesday, ABN Amro said it intends to price 29.1% knock-in reverse exchangeables linked to Elan Corp. plc and 24.4% knock-in reverse exchangeables linked to AMR Corp. Both deals are set to price Feb. 23 and both have a 15-month term. Also, both notes carry an 80% knock-in level.

Finally, Rabo Financial Products BV announced plans earlier this week to price 19% knock-in reverse convertibles linked to NutriSystem, Inc. Those notes are also expected to price Feb. 23 and have an 80% knock-in level.

© 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.