Bank of Montreal Sells Its Biggest Structured Note This Year

Bank of Montreal sold $100 million of notes tied to a basket of 11 stocks that analysts at Raymond James Financial Inc. picked to excel next year, its largest offering in the U.S. in 2012.

The one-year securities, issued Dec. 11, yield the gains of the stocks or American depository shares chosen as “best picks” for 2013 by the equity research team at Raymond James, according to a prospectus filed with the U.S. Securities and Exchange Commission. Raymond James distributed the notes to its network of more than 6,300 advisers for a 2.75 percent fee.

The companies that make up the basket include Bed Bath & Beyond Inc. (BBBY), Jabil Circuit Inc. (JBL) and Tractor Supply Co. (TSCO)

During the last 10 years, the analysts’ selections have averaged an 18.6 percent total return, which includes reinvested dividends, according to the company’s website. Last year, the return was 8.2 percent, compared with 17.2 percent for the Standard & Poor’s 500 Index.

Shereen Sarthou, a spokeswoman for Raymond James, and Martha McInnis, a spokeswoman for Bank of Montreal (BMO), didn’t return calls and an e-mail seeking comment.

A year ago, the Toronto-based bank sold $165.3 million of notes linked to Raymond James’ picks for 2012 in two offerings, according to data compiled by Bloomberg.

Banks create structured notes by packaging debt with derivatives to offer customized bets to retail investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.

To contact the reporter on this story: Kevin Dugan in New York at kdugan4@bloomberg.net

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

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