Barclays takes its turn to dominate issuance with resource and energy reverse convertibles

A coal fire
Coal and energy supplier Walter Energy used for Barclays products

For the latest issuance it is the turn of Barclays to take the lead. Yesterday, Royal Bank of Canada had the lion's share but today Barclays fights back to take the top spot with its reverse convertibles.

Energy and natural resources are one of the predominant themes in the underlyings.  Barclays has issued reverse convertibles linked to Alpha Natural Resources and Cliffs Natural Resources.

The former is the underlying for a three-month product, which pays an annualised rate of 12% and has a downside barrier of 80%. The latter is the basis of a six-month reverse convertible, which pays 10.75% a year and has a 75% barrier against downside falls.

On the energy front, Barclays has issued a reverse convertible tracking the stock of Walter Energy. The one-year product pays a 10.4% return and has a downside barrier of 70%.

There are also two leverage products in the offering with unusually long tenors. Both HSBC and Wells Fargo have issued leveraged products with tenors stretching out longer than three years. Previously, leveraged products have been issued with one- to two-year tenors but recently maturities across product types have been extended.

HSBC's product tracks the Dow Jones Industrial Average and has a term of three years and five months. It offers 120% uncapped participation in the underlying index and a 20% buffer against falls in the underlying.

Wells Fargo's product is based on the iShares MSCI EAFE Index Fund. It also has a tenor of three years and five months. It offers 150% participation in the index, capped at 35–40%, with a downside buffer of 10%.

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