Barclays, ABN Amro each plan reverse convertibles linked to Meridian Gold

By Sheri Kasprzak

New York, Nov. 30 - Meridian Gold Inc. was a popular reference stock Thursday with two deals - one from Barclays Bank plc and one from ABN Amro Bank NV - pricing.

The gold explorer is not the only gold company on the structured products scene this week.

Barclays also priced a $2.5 million offering of 17.5% reverse convertibles linked to Goldcorp Inc.

The recent news of expected gains in gold prices doesn't seem to have anything to do with these offerings, according to market sources.

"It has less to do with the broader price of gold than it does with the actual range of stock prices of the individual [reference] stocks," said one structurer.

"Obviously, to the degree that gold prices will move the stocks, I guess in that case it might have some small part, but investors would be less interested in the broad price of gold than the stock itself."

Another structurer agreed - but only to a point.

"Investors have to look at things like gold prices, in this case, because that is going to move the stock," he said. "Of course they're going to look at a range of prices as well."

Terms of the deals

In the Barclays offering, the investment bank priced $1 million in 13.5% reverse convertibles linked to Meridian.

The one-year notes carry a 70% protection level.

The notes are similar to $530,000 in 20% reverse exchangeables ABN Amro priced linked to Meridian.

Those six-month notes have an 80% knock-in price.

Earlier this year, both Barclays and Amro have priced deals linked to Meridian. In September, Barclays priced 13.25% reverse convertibles linked to the gold explorer and in June, Amro priced $3 million in one-year 10.25% reverse convertibles linked to the company.

During the month of November, Meridian's stock traded between C$28.57 and C$35.32, closing up C$1.40, or 4.13%, on Thursday to close at C$35.32 (Toronto: MNG). For the same month, Goldcorp's stock traded between C$29.35 and C$35.71, gaining C$2.40 on Thursday to close at C$35.71 (Toronto: G).

Other gold-related deals

Earlier this month, HSBC USA Inc. priced $250,000 in 8.5% reverse convertibles linked to Barrick Gold Corp.

In terms of deals linked directly to the price of gold, UBS AG plans to price 0% reverse convertibles linked directly to the price of gold, expressed as the number of dollars equal to one fine troy ounce of 0.995 gold.

ABN Amro's other deals

Looking at other offerings priced this week by ABN Amro, the investment bank priced two offerings with higher-than-usual 90% knock-in levels.

Amro priced $675,000 in 9% reverse exchangeables linked to Home Depot, Inc. with a 90% knock-in price and $265,000 in 9.5% reverse exchangeables linked to Boeing Co. with a 90% knock-in price.

Both are six-month notes.

For November, Home Depot's stock traded between $37.07 and $38.41 (NYSE: HD) and Boeing's stock traded between $79.20 and $91.10.

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