Domestic equities dominate index-linked issuance in US

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Products linked to US market dominate latest issuance

Friday, November 12 saw just one product issued in the US public markets, after a week of mixed volumes. Thursday's product releases were more numerous, with US equities appearing as the dominant theme in index-linked products.

Two issuers chose the S&P MidCap 400 Index as the basis for accelerated growth products. JP Morgan is offering a one-year product with 200% participation in the index, capped at 13.5%, with a 10% downside buffer. Deutsche Bank's product has exactly the same terms. Ratings for the products are very similar, with JP Morgan's product scoring 7.5 overall and 3.1 for the riskmap rating, while Deutsche's achieves an overall score of 7.4 and a riskmap of 3.2.

Two accelerated growth products track the iShares Dow Jones US Real Estate Index. Wells Fargo is offering a product with an unusually long term (30 months) for an accelerated growth product. It features a 200% participation rate capped at 30-35% and downside protection of 15%.

Credit Suisse's product on the same underlying has a two-year maturity. It also offers 200% participation, with the cap on returns set high at 40%. Its downside buffer is set at 10.35%. This product scores better overall than the JP Morgan product at 8.2 and 7.8, respectively. However, its riskmap is higher at 5.5 compared to 4.2 for the Wells Fargo product.

Emphasising the fact that there is a strong appetite for US equities, the Dow Jones Industrial average also makes an appearance in the offering and the S&P 500 holds its position as the favoured equity index underlying.

November 12, 2010

November 11, 2010

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