Bear Stearns plans CDs linked to metals basket; Barclays to price slate of oil-linked notes

By Sheri Kasprzak

New York, Feb. 6 - Bear, Stearns & Co. Inc. led structured products news Tuesday with word that it plans to price certificates of deposit for Bear Stearns subsidiary Custodial Trust Co. linked to a basket of metals.

The offering comes at a time when metal prices are "iffy," according to one market source familiar with commodities.

"Metals are tricky these days," he said. "It's interesting that nickel is included because it seems to be one of the few metals that is making some serious movements. The other metals you mentioned, in fact, have dropped a good deal."

Serious movements, however, aren't a requirement - or even a benefit - in the zero-coupon, principal-protected Bear CDs.

Basket includes nickel, copper

The basket of CDs includes equal weights of nickel, copper, aluminum and zinc and if the basket shows a positive return of 50% or less, payout at maturity will be par plus the return multiplied by a percentage expected to be 150%. The exact multiplier will be determined at pricing.

If the basket level finishes at a positive return of more than 50%, payout will be par plus the return. Investors can expect to receive at least par at maturity.

The CDs are set to price Feb. 16 and are being distributed through LaSalle Financial Services, Inc.

Barclays plans reverse convertibles

Elsewhere in the sector, Barclays Bank plc announced plans to price several reverse convertibles linked to oil and oil-related stocks.

The reverse convertibles are being announced at a time when oil prices have rebounded. Oil prices, however, seem to have topped out at less than $60 per barrel.

On Tuesday, prices edged up 14 cents to close at $58.88 per barrel.

The expectation, one market source said, is that oil prices have probably climbed about as high as they're going to and that the reference stocks will like trade in a range.

Notes linked to Conoco, Valero

Among the underlying stocks for the reverse convertibles are ConocoPhillips, Valero Energy Corp., Canadian Natural Resources Ltd., Global Industries Inc., Halliburton Co. and - from the energy but not oil sector - Peabody Energy Corp.

The ConocoPhillips notes bear interest at 9% annually and the Valero and Global notes bear interest at 9.25% annually. The Canadian Natural and Halliburton notes bear interest at 9.5% annually and the Peabody Energy notes at 13% annually.

The notes all carry a knock-in level of 80%.

All of the one-year notes pay par at maturity unless the final price of the linked shares is lower than the initial price and the reference stock falls below the protection price on any day between the initial valuation date and the final valuation date.

If that occurs, the investors will receive either a number of shares equal to the physical delivery amount plus a cash amount equal to the fractional shares multiplied by the final price or a cash amount equal to the principal amount invested reduced by the percentage decrease in the price per share. Investors will share in any losses.

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