Reverse convertibles surge again; Barclays plans 19.25% notes tied to SanDisk

By LLuvia Mares

New York, Dec. 11 - Once again a surge of reverse convertibles deals crossed the structured products market this week. One market specialist said he believes it has a lot to do with issuers trying to get deals in before the end of the year.

"It's not uncommon to see a surge of products come in like this and so close to the end of the year," he said.

In one of many similar offerings, Barclays Bank plc announced it plans to price reverse convertible notes due June 25, 2008 linked to the common stock of SanDisk Corp.

The six-month notes will pay 9.625% for an annualized rate of 19.25%. Interest will be payable monthly.

The payout at maturity will be par unless SanDisk stock falls by more than 20% during the life of the notes and the final share price is less than the initial share price, in which case the payout will be a number of SanDisk shares equal to $1,000 divided by the initial share price or, at Barclays' option, the equivalent cash value.

The notes will price on Dec. 21 and settle on Dec. 31.

Barclays Capital Inc. will be the agent.

Lehman to sell 21.15% deal

Similarly, Lehman Brothers Holdings Inc. plans to price an issue of reverse exchangeable notes due March 31, 2008 linked to the common stock of Freeport-McMoRan Copper & Gold, Inc.

The three-month notes will pay 5.2875% for an annualized rate of 21.15%. Interest will be payable monthly.

The payout at maturity will be par unless Freeport-McMoRan stock falls below the knock-in level - 75% of the initial share price - during the life of the securities and finishes below the initial share price, in which case the payout will be a number of Freeport-McMoRan shares equal to $1,000 divided by the initial share price.

The notes are expected to price on Dec. 21 and settle on Dec. 31.

Lehman Brothers Inc. is the agent.

Lehman to price notes linked to 10 commodities

Commodity-linked principal-protected notes continue to grow amongst investors; Lehman Brothers Holdings Inc. announced Tuesday it plans to price zero-coupon principal-protected notes with enhanced participation due Jan. 11, 2011 linked to an equally weighted basket of 10 commodities.

The basket consists of light sweet crude oil, Brent Crude Oil, No. 2 fuel heating oil, copper - grade A, primary nickel, special high grade zinc, coffee robusta, cocoa, class III milk and No. 2 wheat.

The notes are expected to price Jan. 7 and settle Jan. 11.

The payout at maturity will be par plus the return on the basket multiplied by a participation rate of at least 110%. The exact participation rate will be determined at pricing. Investors will receive at least par.

Lehman Brothers Inc. will be the underwriter.

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