The securities, issued Nov. 13, yield 8.5 percent a year plus an additional 5.27 percent if the home improvement company gains at least 8.5 percent, with protection against 5 percent of declines before investors take losses, according to a prospectus filed with the U.S. Securities and Exchange Commission. The Swiss bank estimated the notes’ initial value at 97.4 cents on the dollar, according to the prospectus.
Homeowners are spending more on home improvement projects as housing prices improve, said Nicholas Coppola, an analyst at Thompson Research Group in Nashville, Tenn. “People have more confidence that if they make improvements in their houses, they’re going to get a return.”
Thompson reiterated its 12-month target price of $29 for the company on Nov. 12. Masco, the Taylor, Mich.-based maker of items including cabinets, faucets and hot tubs, rose 28 percent this year to $21.32 yesterday.
Bloomberg started to collect comprehensive data on structured notes in 2010.
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 with values derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.
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