Barclays prices $500 million add-on to iPath ETNs linked to AIG Commodity Index

By Sheri Kasprzak

New York, April 11 - Barclays Bank plc grabbed structured products headlines again with another add-on to its popular iPath exchange-traded notes linked to Dow Jones - AIG Commodity Index Total Return.

The latest $500 million issue brings to $2 billion the notes sold.

Asked if the ETNs would likely ever lose their popularity in the marketplace, one market source commented: "Nothing lasts forever.

"I think as long as there is an interest, they will keep selling," he added. "In all seriousness, they're a good product, I have to admit. They're very transparent in terms of things like fees and that's important in this business. They [Barclays] have a good product there."

Another market source agreed.

"Who knows when they'll cease to be popular," he said in response to a similar question. "Right now they're obviously selling well. They keep pricing add-ons, which is an indication that investors have the appetite for them."

Deal terms

As with the existing notes, the payout on these ETNs will be par of $50.00, multiplied by the index factor - the closing value of the index on the final valuation date, divided by the initial level, minus the investor fee. The fee is calculated daily and is equal to 0.75% of par per year, multiplied by the index factor and divided by 365.

The noteholders may choose to redeem their notes on any redemption date, which is the third business day following a valuation date - for a cash payment equal to par multiplied by the index factor on the valuation date, minus the investor fee and less the redemption charge. The redemption charge is a one-time fee of 0.00125 multiplied by the weekly redemption value.

There is a minimum redemption requirement of 50,000 notes.

ABN plans reverse exchangeables

Elsewhere in structured products news, ABN Amro Bank NV announced its plans to price 20% reverse exchangeable securities linked to Flamel Technologies SA.

The six-month notes pay par unless the stock falls below the 75% knock-in level during the life of the notes and ends below the initial share price. At that point, the notes pay a number of shares equal to $1,000 divided by the initial share price.

The size of the offering, set to price April 24, will be no less than $500,000 but no larger than $2 million.

The investment bank also plans to price 13% reverse exchangeables linked to the stock of Qualcomm Inc. The size of that deal will also be at least $500,000 but less than $2 million.

The Qualcomm-linked deal is set to price April 23 and pays par at maturity unless the stock falls below the 80% knock-in level during the life of the notes and ends below the initial share price.

In that case, the notes will also pay a number of shares equal to $1,000 divided by the initial share price.

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