Deutsche Bank, UBS plan phoenix autocallable securities linked to crude oil, Ford, Citigroup

By Sheri Kasprzak

New York, Sept. 17 - Phoenix autocallable securities are among a new crop of offerings coming up in the near future. Quite a few of the securities are slated to price within the next week, including phoenix autocallable securities from Deutsche Bank AG, London Branch linked to the performance of the nearby month's Brent crude oil futures contract as traded on the IntercontinentalExchange.

The short tenor of the Brent crude oil-linked securities is curious, said one sellside source when asked about the offering.

"Autocallables are generally longer," he said.

The Deutsche Bank securities have a one-year maturity, as opposed to similar upcoming offerings from UBS AG, London Branch, which are linked to corporate stocks and have five-year maturities.

"That's certainly an interesting point. The coupon is larger than typical, which probably is more of a reflection of the volatility of the underlier than the short term," he said.

"If you had a longer term, obviously the risk would be greater. There's more time for circumstances to change. It could be something for investors who believe there is some short-term risk involved in this underlier, which seems reasonable."

Securities pay 15% coupon

If the futures contract closes at or above the threshold price - 80% of the initial price - on a quarterly observation date, the issuer will pay a contingent coupon for that quarter at the rate of 15% per year. Otherwise, no coupon will be paid that quarter.

If the futures contract closes at or above the initial price on a quarterly observation date, the notes will be called at par plus the contingent coupon.

If the notes are not called and the futures contract finishes at or above the threshold price, the payout at maturity will be par plus the contingent coupon. Otherwise, investors will be exposed to the decline from the initial price.

The notes are expected to price Friday.

JPMorgan Chase Bank, NA and J.P. Morgan Securities LLC are the placement agents.

The Cusip number is 2515A1NV9.

UBS preps two offerings

Meanwhile, UBS is set to price trigger phoenix autocallable optimization securities due Sept. 27, 2017 linked to the common stock of Ford Motor Co., said an FWP filing with the Securities and Exchange Commission.

If Ford stock closes at or above the trigger price - 70% of the initial share price - on a monthly observation date, the issuer will pay a contingent coupon for that month at the rate of 7.25% to 9.25% per year. Otherwise, no coupon will be paid that month. The exact contingent coupon will be set at pricing.

If the shares close at or above the initial price on a monthly observation date after one year, the notes will be called at par of $10 plus the contingent coupon.

If the notes are not called and Ford shares finish at or above the trigger price, the payout at maturity will be par plus the contingent coupon. Otherwise, investors will be exposed to the share price decline from the initial price.

The investment bank also intends to price trigger phoenix autocallable optimization securities due Sept. 27, 2017 linked to the common stock of Citigroup Inc.

The trigger price is 60% of the initial share price, and the contingent coupon rate is expected to be 7.5% to 9.5% per year.

Both UBS offerings are expected to price Friday.

UBS Financial Services Inc. and UBS Investment Bank are the underwriters.

The Cusip number is 90269V462 for the Ford notes and 90269V454 for the Citigroup notes.

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