UBS Follows Largest Equity-Tied Structured Note With Similar ETN

UBS AG (UBS) is coming to market with an exchange-traded note tied to the performance of large U.S. growth stocks less than a month after selling a similar security in the largest equity-linked sale in more than two years.

The FI Enhanced Big Cap Growth ETN, which started trading today under the ticker FBG, tracks twice the gains and losses of the Russell 1000 Growth Index, according to a prospectus filed with the U.S. Securities and Exchange Commission. The bank sold $946.2 million of structured notes tied to the measure to Fisher Asset Management LLC on May 16, the largest such deal since at least the beginning of January 2010, according to data compiled by Bloomberg.

The Russell 1000 gauge, which follows companies with the fastest earnings growth, has climbed 6.4 percent this year, compared with a 4.6 percent rise for the Standard & Poor’s 500 Index, Bloomberg data show.

UBS has 46 ETNs in the U.S. with about $1 billion of assets, Bloomberg data show. The U.S. industry has a market capitalization of about $15.5 billion, less than 2 percent of the $1.2 trillion of exchange-traded funds.

ETNs are unsecured bank debt backed by their issuer’s credit, unlike exchange-traded funds, which hold assets. Banks create and redeem shares of ETNs based on the level of demand for the securities. That demand typically doesn’t affect the price since the ETNs track the performance of an index.

To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.