Barclays investor guidance cautions on iPath S&P GSCI Crude Oil ETNs

By Wendy Van Sickle

Columbus, Ohio, Jan. 20 – Barclays Bank plc announced an investor guidance notification Wednesday regarding its iPath S&P GSCI Crude Oil Total Return index exchange-traded notes, according to a press release.

The notes are listed on the NYSE Arca under the symbol “OIL.”

“Recently, a material premium has developed in the trading price of the ETNs on the exchange in relation to their intraday indicative value,” the release states.

From Jan. 1 to Jan. 19, the release continues, the daily redemption value fell by about 30% to $3.95 from $5.67 per ETN, while the closing price of the ETNs on the exchange fell by only about 11% to $5.58 from $6.26 per ETN. The closing price of the ETNs on the exchange as of Tuesday reflected a 41% premium to the corresponding closing indicative value.

“Due to the current market dynamic in the sale by the issuer of ETNs from inventory, there are likely to be continued fluctuations in this premium if strong interest from exchange participants in purchasing the ETNs continues,” according to the release.

“Investors considering any purchase of the ETNs should be aware of the fact that the intraday market prices of the ETNs on the exchange could be significantly higher than the intraday indicative value of the ETNs as calculated with reference to the level of the underlying index, minus an investor fee.”

However, because of volatility in the secondary market premiums for the ETNs, investors should not assume they will continue to trade at a premium in relation to their intraday indicative value, Barclays said.

The release calls the ETNs “riskier than ordinary unsecured debt securities” and points out that they offer no principal protection.

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