Societe Generale SA and BNP Paribas SA are leading $635 million of sales of structured notes tied to a global index of companies that pay the highest dividends relative to their share price.
SocGen sold 253 million euros ($325.7 million) of notes linked to returns on the Stoxx Global Select Dividend 100 Index since it began selling them this year, according to data compiled by Bloomberg. BNP Paribas issued 125 million euros of the notes, which are tied to the performance of the stock index rather than the dividend payouts themselves.
The securities typically mature in six to eight years and offer a fixed coupon along with a final cash settlement. The Stoxx index, which is trading near a five-year high, includes London-based BAE Systems Plc, which yields 4.96 percent.
“Our clients are more and more looking for indexes linked to high dividend stocks,” said Laurent Besnainou, Societe Generale’s head of cross asset sales for France.
The Stoxx Global Select Dividend 100 Index climbed to 2258.1 at 8 a.m. in London, the highest level since June 5, 2008, according to data compiled by Bloomberg.
Structured notes tied to equities, such as reverse convertibles and auto-callable securities, typically do not give investors any of the dividends paid on the underlying stock. Dividend index-linked securities allow investors to benefit from the share price gains of companies listed on the benchmark.
Structured notes package debt with derivatives to offer customized bets to investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, currencies and commodities.