Americas best-selling products H1 2022: US pharmaceutical outsells S&P

US

Bank of America – Cash-Settled Equity Linked Notes (09709UV70) – US$515m

The best-selling US product in the semester was a five-year registered note on the share of Merck & Co, an American multinational pharmaceutical company. Every six months, the product offers a fixed coupon of 0.60% pa. At maturity, the capital return is minimum 100%. Investors receive an additional return if the underlying share appreciates by more than 14% from its initial reference price, which was set at US$92.10 on 18 May 2022. The initial estimated value of the notes is US$987 per US$1,000 in principal amount. Bank of America (BofA) Finance is the issuer while BofA Securities acts as the selling agent.

Royal Bank of Canada – Accelerated Return Notes (78015B856) – US$139.9m

Another product sold via BofA Securities, this time on the S&P 500, was issued on the paper of Royal Bank of Canada (RBC). It has a tenor of 14 months and struck on 27 January when the index closed at 4,326.5 points. The product offers 3-to-1 upside exposure to increases in the index, capped at 14.94%. If the final index performance is negative, the investor participates 1:1 in the fall. In addition to the underwriting discount of 1.75%, the notes include a hedging-related charge of US$0.05 per unit. The initial estimated value of the notes is US$9.7276.

J.P. Morgan – Buffered Enhanced Participation Basket-Linked Notes (48133DWW6) – US$105.9m

This five-year product was distributed via Goldman Sachs Private Banking. It offers access to a weighted basket comprising five indices: FTSE 100, S&P/ASX 200 Index, Swiss Market Index (SMI), Topix Index (Tokyo), and Eurostoxx 50. If the basket return is positive, the product offers 100% capital return, plus 192.10% of the rise. Otherwise, the capital return equals 100% minus 1.1111% for every one percent fall in excess of the initial 10% fall. Underwriting commission is 4.33%. A fee is will also be paid to Simon Markets, an electronic platform that is acting as a dealer in connection with the distribution of the notes. The estimated value of the notes is US$942.70 per US$1,000 principal amount.

HSBC Bank – Accelerated Return Notes (40390L511) – US$105.3m

More accelerated return notes, again on the S&P 500, were distributed via Merrill Lynch, Pierce, Fenner & Smith (MLPFS) and BofA Securities. This product offers 300% of the rise in the index over the 1.2-year investment period, subject to a maximum overall return of 118.37%. If the index performance is negative, the investor is 100% exposed to the fall. The starting value of the index is 4,057.84. The underwriting discount is 1.75% and this product too includes a hedging-related charge of US$0.05 per unit. The initial estimated value of the notes is US$9.726.

Goldman Sachs – Index-Linked Notes (40057MH77) – US$96.9m

This one-year registered note is linked to the Bloomberg Commodity Index, which reflects commodity futures price movements. The return on the notes will equal the index return – positive or negative. The initial level of the index is 126.329. The product is issued at 98.15%. The estimated value is US$957.5 per US$1,000 face amount. GS Finance estimates that its share of the total offering expenses, excluding underwriting discounts and commissions, will be approximately US$20,000.

MEXICO

Banco Santander – Dual Currency Note 12% pa – MXN1.64 billion (US$80m)

Santander was behind the best-selling Mexican product in H1 2022. It came in the shape of a dual currency note linked to USD/MXN currency pair, which had a maturity of 15 days. If the US dollar appreciates against the Mexican peso, the product offers 100% capital return plus 12% pa, paid in MXN. Otherwise, the product offers at maturity a 100% capital return plus the coupon, paid in USD at a 20.215 exchange rate.

BBVA Mexico – Dual Currency Note 16.82% pa – MXN1.59 billion (US$78m)

Another dual currency note, also on the USD/MXN, was issued on the paper of BBVA. Its terms and maturity were like Santander’s note. If the USD appreciates against the MXN, the product offers at maturity a 100% capital return plus 16.82% pa, paid in MXN. Otherwise, the product offers at maturity a 100% capital return plus the coupon, paid in USD at a 20.23 exchange rate.

Monex – Accrual Range Note 0.78% pa – MXN879.3m (US$43m)

At maturity, this product offers a capital return of 100%, plus 0.78% pa pro-rated for the number of business days in the one-week investment period when the USD/MXN currency pair is equal to or greater than 19.88, and equal to or lower than 20.34. Otherwise, the product offers a capital return of 100%.

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