Citigroup prices $46.5 million in notes linked to pharma basket; JPMorgan plans notes linked to Nikkei 225

By Sheri Kasprzak

New York, Sept. 5 - Citigroup Funding Inc. stood out in recent structured products activity with the pricing of $46.5 million in notes linked to a basket of pharmaceutical stocks.

"All [the issuers] are strong names with strong stock," said one market source familiar with the offering. "The weight of each issuer is distributed pretty well so [investors] aren't dependent solely upon just one."

The 0.125% notes are linked to a basket that includes BioMarin Pharmaceuticals Inc., which has 30% weight; Alexion Pharmaceuticals, Inc., which has 30% weight; Vertex Pharmaceuticals Inc., which has 30% weight; and Cubist Pharmaceuticals, Inc., which has 10% weight.

The notes are due Sept. 7, 2011.

"It's an interesting structure," said another equity structurer when asked about the deal. "It's not that uncommon though to have notes linked to one particular sector. Those appeal, obviously, to investors who focus on that sector. Those are pretty big-name companies so it seems like a good way to pull it together."

Holders can exchange from Sept. 30 onwards and Citi can call the notes from Aug. 30, 2008. The securities automatically exchange in the event of a call if the payout is higher. If not converted, the notes pay par at maturity.

JPMorgan's notes linked to Nikkei 225

Elsewhere Tuesday, JPMorgan Chase & Co. announced their plans to price annual review notes linked to the Nikkei 225 index.

"Emerging markets are doing amazing well and that, in turn, is pushing the Nikkei [225]," said one insider familiar with the deal. "Especially Asia and Latin America, we have a lot of clients looking for structures like this."

On Tuesday, the Nikkei 225 was up 0.17% to close at 16,385.96.

The market source could not remark further on the offering as its pricing is forthcoming.

The notes, however, are due Sept. 23, 2009 and for every $1,000 in principal, the investors will receive a payment of $1,000 plus a call premium equal to 10% on the first review date, 20% on the second review date and 30% on the final review date.

Similarly, JPMorgan announced plans to price 0% buffered return enhanced notes linked to a basket including the Amex Hong Kong 30 index, the FTSE/Xinhua China 25 index, the Korea Stock Price index 200, the MSCI Taiwan index and the MSCI Singapore index. Those notes will be due on Oct. 12, 2007.

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