US Wrap: Royal Bank of Canada rejoins issuance with accelerated growth product

Royal Bank of Canada has joined the offering with an accelerated growth product after being quieter on the issuance front of late.

The Buffered Bullish Notes Linked to the S&P 500 Index are five-year investments, an unusually long term for this type of product in the US. The product has 100% market participation, meaning it is not really an accelerated growth product. Instead,  "principal at risk participation product" would be a more accurate description, according to Tim Mortimer at Future Value Consultants in London.

It is also unusual to have a product offering 100% of the rise in an index, as products in the US market that are index-linked tend to give investors higher participation. The notes have a 15% buffer, after which capital is lost at the rate of 1:1.

Barclays has a principal-protected note in the offering, also based on the S&P 500. The Principal Protected Notes Linked to the S&P 500 Index are five-year investments with 100% participation and no cap, and the principal is protected at maturity.

US Steel and Research in Motion are used as underlyings in the reverse convertibles in the issuance; they are regularly used for these products in the US market, perhaps due to their moderately low volatility.

march182010

 

Source: FVC and SEC filings

For access to analysis of the US structured products market: www.structurededge.com

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