Reverse convertibles retain strength as week winds down, tech names stay popular

By Sheri Kasprzak

New York, Oct. 6 - Reverse convertibles remained hot among structured products offerings to settle the week and technologies companies topped the menu with some names popping up again.

Barclays Bank plc announced an offering of 19% reverse convertibles linked to SanDisk Corp. Those notes are due Jan. 24, 2007 and carry an 80% protection level.

SanDisk is a tech name that has been linked to other reverse convertible offerings. Rabobank Financial Products BV plans to price 14% notes linked to SanDisk. Those notes are due April 30, 2007 and the knock-in level is equal to 70% of the initial price.

Another tech-related offering came from HSBC USA Inc., which announced the upcoming pricing of 9% reverse convertible notes linked to Intel Corp. Those notes are due Oct. 26, 2007 and have a 90% protection level.

Among other tech names that have been linked to reverse convertibles in the week just completed were Apple Computer, Inc., Yahoo! Inc., Qualcomm Inc., and Advanced Micro Devices.

One non-tech name that crept up more than once in the week was Nutri/System, Inc. HSBC plans to price 18% reverse convertibles linked to Nutri/System. The notes, due Oct. 26, 2007, have a protection level equal to 70%.

CreditSuisse (USA), Inc. said earlier this week it plans to price 19.5% reverse convertible notes linked to Nutri/System.

Wachovia plans commodity notes

Moving to commodities, Wachovia Corp. announced plans to price enhanced yield notes linked to a basket of commodities that includes West Texas Intermediate crude oil, zinc, aluminum, copper, lead and nickel.

One market source said the inclusion of crude oil in the basket of commodities isn't really that odd, even given the shaky nature of oil prices over the past month.

"These [notes] have a pretty long term and we all know that oil rises and falls at the drop of a hat," he said.

"The others [commodities in the basket] already have strong investor appeal, especially copper. We've seen a lot with copper recently and looks like a few coming up. But if you're worried about the oil [portion], I can almost guarantee you that oil will rise and it will probably fall again too before the [valuation date]."

The notes are due in 2009 and interest rate will be between 10% and 12%. The exact rate will be determined at pricing.

Each component of the basket has equal weight and if any component falls below the 65% barrier value of the initial value on any interest valuation date, the interest rate for that period will be zero. Payment at maturity will be par plus any accrued interest.

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