US Wrap: Royal Bank of Canada focuses on high-growth energy sector

Energy proves to be a bright idea for the US market

Royal Bank of Canada is the sole issuer for the second day running and it has chosen energy companies as the focus for its reverse convertibles. Green energy in particular has been a big growth industry globally in the first quarter.

The Reverse Convertible Notes linked to Chesapeake Energy Corp, a natural gas company, are six-month investments offering 11.5% annual returns. There is an 80% protection barrier, after which capital is lost at the rate of 1:1. The low volatility of both product and underlying means the riskmap score is a low 3.4.

Industrials also provide the basis of a few products in the offering. US Steel is a frequent feature in the US issuance. The Reverse Convertible Notes linked to United States Steel Corp are three-month investments paying an annual coupon of 13.25%. There is a 75% barrier, after which capital will depreciate at the rate of 1:1.


Source: FVC and SEC filings

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