US Wrap: Easter money is on US equity alongside rare commodity note

There were 15 new issues in the US market over the Easter period, with all but one offering exposure to US equity. New launches since last Thursday included a mix of reverse convertibles and accelerated growth or kick out structures linked to the S&P 500. Two more robust looking financial stocks, JP Morgan and Wells Fargo, formed the basis for two notes, paying annualised coupons of around 15% each. Higher coupons are on offer from non-financial corporations. A six-month note linked to the mining company Freeport-McMoran, for example, will earn the investor an annualised coupon of 20%. JP Morgan has structured a three-month note linked to the reference stock of Alcoa, the aluminium producer, which pays 22% (annualised).

The only product to buck the trend was a commodity-linked note issued by Morgan Stanley, the first seen in public placement this year. It lasts 18 months and pays 140% participation in the index up to a cap of between 46-52% (the exact level to be determined on the pricing date). As with most products now being issued in the low-rate environment, it offers no downside protection. The launch of such a product may be a sign that investor wariness over volatile commodity markets is easing up. While