Barclays prices $250 million iPath S&P 500 BuyWrite index ETNs

By Sheri Kasprzak

New York, May 23 - Yet another issue of exchange traded notes from Barclays Bank plc topped structured products news on Wednesday - this one $250 million in iPath CBOE S&P 500 BuyWrite (BXM) index exchange traded notes.

"These have been wildly popular," said one market insider. "There's a lot to be said for them. There is the transparency and they also allow access to markets that investors may not otherwise have access to."

Another market source agreed and when asked if some other investment banks might be looking at a similar type of offering, he noted that there may be some legal ramifications.

"I don't doubt that something similar is a possibility, but I imagine it would be a slippery slope in terms of proprietary issues and patents and all that," he said. "I do think that something like this could be done elsewhere though and it probably will be at least attempted."

Barclays has a patent pending on the notes iPath notes.

Note terms

The latest iPath notes have a 30-year term and pay par of $50 plus any gain or loss on the index, minus the investor fee, which is equal to 0.75% of par per year multiplied by the index factor, calculated daily. The index factor is equal to the closing level of the index each day divided by the initial index level.

The CBOE S&P BuyWrite index tracks the total return of a hypothetical buy write, or covered call strategy, on the S&P 500 index.

New notes trade on Amex

In related news, Barclays and the Chicago Board of Options Exchange announced that the new notes began trading on the American Stock Exchange under the symbol BWV.

"The new iPath ETN assists investors in getting a simple, transparent cost and tax-efficient exposure to the CBOE S&P 500 BuyWrite index," said Philippe El-Asmar, Barclays' managing director and head of investor solutions, Americas, in a news release.

"CBOE is pleased to see continued recognition of the CBOE S&P 500 BuyWrite index, the first major benchmark for options-related performance, and the winner of the Most Innovative Benchmark Index distinction of the Super Bowl of Indexing conference," said Edward Provost, CBOE's executive vice president of business development, in a statement.

Morgan Stanley's MSCI EAFE-linked notes

In other structured products news, Morgan Stanley sold $30 million in Performance Leveraged Upside Securities linked to the MSCI EAFE index.

The two-year notes pay par at maturity plus 147% of any gain on the index. If the final index level is equal to or less than the initial index level, payout will be par unless the index hits the 80% trigger level.

If that occurs, the investors will lose 0.5% for each 1% decline in the index.

Index performance

The MSCI EAFE index includes almost 1,000 stocks from 21 developed countries outside of North and South America.

The index's 52-week high, as of May 22, was 10,880.74 reached on May 7, 2007 and the 52-week low was 7,793.149, reached on June 13, 2006.

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