Credit Suisse Group AG sold $46 million of one-year notes tied to Occidental Petroleum Corp., the largest offering linked to the biggest oil producer in the contiguous U.S. in at least three years.
The securities, issued Oct. 17, pay four monthly coupons of 2 percent, according to a prospectus filed with the U.S. Securities and Exchange Commission. If Occidental doesn’t rise at least 8 percent, investors could lose as much as 21.3 percent of their principal, though they receive .65 times any share gains beyond 13.1 percent.
The bank estimated the initial value of the securities at 99.9 cents on the dollar.
Occidental Petroleum plans to sell off assets to become more profitable. The Los Angeles-based oil and natural gas company rose 28 percent this year to $97.82 at the close of trading today.
There isn’t a “tremendous amount of value if you look at a sum-of-the-parts break-up relative to where the stock’s trading now,” said Jason Gammel, an analyst at Macquarie Capital Europe Ltd. in London. “Perhaps as they’re selling assets, they might be able to extract more value than what’s reflected in their stock.”
Macquarie Capital raised its 12-month outlook on Occidental to $96 a share yesterday.
Drew Benson, a spokesman for Credit Suisse in New York, declined to comment on the offering.
Bloomberg started collecting comprehensive data on U.S. SEC-registered structured notes in 2010.
Banks create the securities by packaging debt with derivatives to offer customized bets to retail investors while earning fees and raising money. Derivatives are contracts that have a value derived from stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.