Indonesian rupiah is an EM currency to watch as JPMorgan preps notes linked to the currency

By Sheri Kasprzak

New York, Sept. 29 - Despite global economic crises, the Indonesian rupiah might just be a currency to watch, said one sellside source specializing in emerging markets.

"It really does seem to be shaking off a lot of the global meltdowns that are happening now," the source said.

"It's seen some decent growth recently. It's not skyrocketing, but it's been steady. From everything I've read, more growth is coming this year, so it's something to keep an eye on."

The rupiah on Thursday gained 0.4% after a 1.7% gain on Wednesday. Western Asset Management Co. said in a statement Thursday that it anticipates 6.5% growth for 2011.

JPMorgan deal ahead

In fact, JPMorgan Chase & Co. is poised to offer 0% single observation capped market plus notes linked to the performance of the currency relative to the dollar on Friday, according to an FWP filing with the Securities and Exchange Commission. The notes are due Oct. 12, 2012.

If the final spot rate is less than the initial spot rate by more than the knock-out buffer percentage, which is expected to be at most 30%, the payout at maturity will be par plus the currency return, with full exposure to losses. Otherwise, investors will receive par plus the greater of the currency return and a contingent minimum return that is expected to be at least 7%.

The exact terms will be set at pricing.

The offering is expected to settle on Wednesday.

Similar sale from HSBC

HSBC USA Inc. is set to come to market with securities linked to the rupiah, among other currencies. The basket will also include the Colombian peso, the Malaysian ringgit and the Chinese renminbi.

The 0% Currency Accelerated Return Securities are due September 2013.

The payout at maturity will be par plus 140% to 160% of any basket appreciation relative to the dollar. The exact participation rate will be set at pricing. Investors will be exposed to any basket depreciation, subject to a minimum payout of $900 per $1,000 principal amount of notes.

Morgan Stanley sells $54 million

In other pricing news Thursday, Morgan Stanley priced $54 million of contingent coupon range accrual notes based on the performance of the S&P 500 index, said an FWP filed with the Securities and Exchange Commission.

The notes are due Sept. 30, 2026.

During the fixed interest rate period, the coupon is 8%. In the floating interest rate period, which begins Sept. 30, 2012, the interest rate will be 8% per year multiplied by the proportion of days on which the index closing value is greater than or equal to 870.

The payment at maturity will be par.

The deal is expected to settle on Friday.

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