Barclays notes ‘material premium’ in price of iPath Natural Gas ETNs

By Angela McDaniels

Tacoma, Wash., Jan. 22 – Barclays Bank plc believes that its 0% iPath Bloomberg Natural Gas Subindex Total Return exchange-traded notes are "currently not suitable for most investors," according to a bank news release.

The bank said there has been a persistent and material premium in the trading price of the ETNs in relation to their intraday indicative value recently.

From Dec. 1 to Jan. 12, the indicative value of the notes decreased by 41% to $1.39 from $2.34 per ETN while the closing price of the ETNs on the exchange decreased by only 17% to $2.00 from $2.40 per ETN. The closing price on Jan. 12 was a 44% premium to the current indicative value.

"Due to likely continued fluctuations in this premium, Barclays believes that the ETNs are currently not suitable for most investors and will not track the price of the underlying natural gas futures index in a consistent manner," the bank said in the release.

Daily redemptions at the option of the holders continue to stay open.

The ETNs have a par amount of $50.00 and closed at $1.81 (NYSE Arca: GAZ) on Thursday.

This is the second time Barclays has noted such a premium. The first time was on May 18, 2012.

The bank temporarily suspended any further issuance of the ETNs (Cusip: 06739H644) in August 2009.

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