Freddie Mac sells $80 million step-up notes; HSBC brings $58.3 million notes tied to Ford

By Sheri Kasprzak

New York, June 15 – A couple of substantial structured products offerings hit the market Monday, led by non-call step-up notes from Freddie Mac.

Freddie Mac sold $80 million of 1% initial-rate five-year non-callable 0.25-year step-up notes at par, the agency’s website said Monday.

The bonds are due July 9, 2020 and have a Bermuda call beginning Oct. 9.

BMO Capital Markets Corp. is the manager for the deal.

HSBC sells STEPs

Another major deal came from HSBC USA Inc., which offered $58.3 million of 7.5% STEP Income Securities linked to the common stock of Ford Motor Co.

The notes are due June 24, 2016 and pay at maturity par of $10 plus the step payment of 3.31% if the final price of Ford stock is greater than or equal to the step level, which is 107.5% of the initial share price.

If the final share price is greater than or equal to the initial share price but less than the step level, investors receive par at maturity.

If the final share price is less than the initial share price, investors will have a one-to-one exposure to the decline.

BofA Merrill Lynch is the manager.

Barclays, Euro Stoxx 50 notes

Elsewhere during the day, Barclays Bank plc priced $59.54 million of zero-coupon autocallable market-linked step-up notes linked to the Euro Stoxx 50 index.

The notes will be automatically called at par of $10 plus a call premium of 12.2% per year if the index closes at or above the initial index level on June 17, 2016 or June 23, 2017.

If the notes are not called and the final index level is greater than the step-up value, 130% of the initial index level, the payout at maturity will be par plus the index return.

If the final index level is greater than or equal to the initial level but less than or equal to the step-up value, the payout will be par plus the step-up payment, 30%.

If the final index level is less than the initial level, investors will be fully exposed to the decline.

BofA Merrill Lynch is the agent for the deal.

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