The Swiss investment bank, UBS, has added to its Trigger Phoenix Autocallable Optimization Securities series, including products linked to the shares of Michron Technology, Sprint Nextel and Sandisk.
At the end of 2010, the bank began to launch the Trigger Phoenix Autocallable Optimization Securities series with only three to five options being offered in any given series. In this last week, we have seen 32 different tranches launched in this series.
The brand new notes are exposed to new underlyings such as hi-tech firm Sandisk, a manufacturer of flash memory cards for imaging, computing, mobile and gaming devices. The monthly Sandisk option offers a coupon of 16% pa paid monthly, if the level of the share does not fall by 18.62% or more from its initial level on the monthly observation date. Otherwise, no coupon is paid for that period.
This product, as with all other offerings in this series, can be terminated early if the underlying share level is equal to or greater than its strike level on any monthly observation date. Capital is protected unless the final level of the share falls by 18.62% or more from its initial level. In this case, capital returned is reduced one for one with the fall in the share.
According to SRP data, a total of 754 autocallable reverse convertibles were issued in 2011. In 2012, we have already seen 339 such offerings. UBS is by far the most active issuer with this structure.
UBS was unavailable for comment by press time.