Wells Fargo Sells Biggest Note Tied to Intel Since January 2011

Wells Fargo & Co. (WFC) sold $41.4 million of callable seven-year notes tied to Intel Corp. (INTC), the largest such offering since January 2011.

The securities, issued June 5, yield 34.633 times the stock price of the company and can be redeemed by the bank any time after July 12, according to a prospectus filed with the U.S. Securities and Exchange Commission. The bank didn’t charge a fee for distribution.

The stock would have to rise almost 17 percent from its value at the time of sale to $28.88 to return $1,000, which was the principal amount.

Intel may increase its market share in the mobile and tablet market to 30 percent at the end of 2014 from about 5 percent now, said Kevin Cassidy, a Washington-based analyst at Stifel, Nicolaus & Co.

“The manufacturing technology advantage that they have is going to get Intel products designed into more mobile products,” he said.

The brokerage lowered its 12-month target price of Santa Clara, California-based Intel to $28 from $33 on Oct. 17.

Shares of Intel, the world’s largest semiconductor maker, rose 21 percent this year to $25.01 as of the close of trading yesterday.

Barclays Plc (BARC) sold $100 million of one-year notes tied to Intel on Jan. 4, 2011, according to a prospectus filed with the SEC.

Shelley Beason, a spokeswoman for San Francisco-based Wells Fargo, didn’t respond to a voicemail and an e-mail seeking comment on the note or the stock.

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

Bloomberg reserves the right to 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.