Goldman Sachs Sells Biggest Topix-Tied Note Since December 2010

Goldman Sachs Group Inc. sold $85 million of notes tied to the Topix index of Japanese stocks, the largest such offering since December 2010, after increasing the size twice.

The six-month securities, $15 million of which were most recently issued on June 4, yield the gains and losses of the benchmark with all capital at risk, according to a prospectus filed with the U.S. Securities and Exchange Commission. The New York-based bank sold the first $50 million offering on March 21 and $20 million more on May 31.

Japan’s stocks have gained the most among developed markets this year after Prime Minister Shinzo Abe pledged to beat deflation and the Bank of Japan embarked on unprecedented stimulus measures. The central bank plans to buy more than 7 trillion yen ($71 billion) of bonds a month to increase inflation to 2 percent within two years.

“As Japan continues to pursue these policies, it is helping to bolster domestic and foreign interest in their stock market,” said Michael Woolfolk, global markets strategist in New York at Bank of New York Mellon Corp.

The Topix, as the Tokyo Price Index is known, climbed 29 percent to 1,111.97 this year as of the close of trading on June 10. The Standard & Poor’s 500 Index, the most common equity benchmark tied to U.S. structured notes, rose 15 percent to 1,642.81 during the same period.

The bank estimated the value of the original offering as 98.9 cents on the dollar, a prospectus filed with the SEC shows.

Bigger Offerings

There have been two larger offerings tied to the Topix index since 2010, when Bloomberg started collecting comprehensive data on structured notes. The biggest, $174.2 million of 16-month notes, was issued by the Scandinavian lender Eksportfinans ASA on Dec. 8, 2010.

Tiffany Galvin, a spokeswoman for Goldman Sachs in New York, declined to comment.

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.

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