After deviating into a variety of product structures in recent issuances, the US market has returned to its love affair with the reverse convertible in the latest offering. One of these, issued by Barclays, is based on the MSCI Brazil Index Fund.
This is unusual for the US market, where reverse convertibles tend to be based on the stock of a single company. This product is more in line with the type of reverse convertible offered in the UK, where they are usually based on an index.
The product functions in the same manner as other reverse convertibles in the market: it is a six-month product that pays an annual rate of 10.5% and has a 75% protection barrier, which, if breached, means capital is lost at the rate of 1:1. The product scores low overall with a rating of 4.3 and the riskmap score is 2.9.
There are a few accelerated growth products thrown into the offering, one which comes from Credit Suisse and is based on a basket of six stocks.
The six-month product offers 150% market participation, with a cap at 22%. There is no principal protection and any fall in the value of the stocks will result in capital being lost at the rate of 1:1. The product scores a high overall score of 8.4 as it has the potential to outperform the market and a moderately low riskmap rating of 4.6.
Basket-based products have become increasingly popular over the past few months in the US market but most are based on a basket of funds rather than the single stocks selected for this basket product.