The latest US issuance is much larger than usual, although, as with a lot of the US offering, reverse convertibles issued by Barclays make up the majority of the products issued. A good portion of these are based on gold, which continues to be an attractive sector.
The Reverse Convertible Notes linked to Kinross Gold are issued by Barclays and track the stock of the mining company. The notes have a one-year maturity and pay 9% per year. There is an 80% barrier and after that capital is lost at the rate of 1:1.
The product has a riskmap rating of 7.6 due to the high annualised volatility of the underlying. The popularity of investment in gold has been fuelled by uncertainty over inflation in the US. But Kinross might not be the best bet for those looking to invest in the precious metal, as earlier this week Deutsche Bank predicted it would be outperformed by Barrick Gold.
Barclays has also issued notes linked to Eldorado Gold, a Vancouver-based gold mining company, which saw gains of 0.6% on Wednesday this week and has performed well over the past month.
The notes have a one-year maturity and pay an annual coupon of 9%. There is a 75% barrier, after which capital is lost at the rate of 1:1. The underlying for this product also has a high annualised volatility, bringing the riskmap level up to 7.5.
Industrial metals, energy companies and airlines are all a strong theme for the latest issuance, following a general trend in the market for investment in these sectors. There are also a handful of reverse convertibles based on the leisure and entertainment industry.
Barclays has issued six-month notes based on Live Nation Entertainment, which owns Live Nation, the concert promotion company, and Ticketmaster. The notes pay a 12% annual return and have a 75% protection barrier, after which capital is lost at the rate of 1:1. These notes have a riskmap rating of 7.3, again due to the volatility of the underlying.