Barclays Sells Largest Equity-Tied Structured Note This YearKevin Dugan
Barclays Plc sold $121.6 million of 13-month notes tied to Ford Motor Co., the largest equity-linked offering this year.
The securities, issued April 11, yield 8 percent a year, plus an additional 7.52 percent if the stock rises at least 8 percent from its initial value, according to a prospectus filed with the U.S. Securities and Exchange Commission. The notes, which Bank of America Corp. distributed for a 1.75 percent fee, have all principal at risk.
Mark Lane, a spokesman for Barclays in New York, didn’t respond to a voice mail seeking comment on the notes.
The next-largest offering tied to the Dearborn, Michigan-based car company was $121.1 million of one-year securities issued by Bank of America on March 29, 2012, according to data compiled by Bloomberg going back to January 2010. The notes yielded 10 percent interest, though didn’t make an extra 4.51 percent “step” payment because the stock failed to rise at least 10 percent, according to analysis of a prospectus filed with the SEC.
Shares of the manufacturer of last year’s best-selling car, the Ford Focus, have gained 1.3 percent this year to $13.12.
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.