Goldman sees US structured product sales rocket

Goldman Sachs has reported record net revenues of US$17.70 billion in the first quarter of 2021, more than double the amount in the first quarter of 2020.

The group’s Global Markets division generated quarterly net revenues of US$7.58 billion, 47% higher than the first quarter of 2020, and its highest quarterly net revenues since 2010.

Net revenues in equities were US$3.69 billion, up 68% year-on-year, due to significantly higher net revenues in both equities intermediation, reflecting significantly higher net revenues in both derivatives and cash products, and equities financing, reflecting improved market conditions and increased activity.

In fixed income, currency and commodities (FICC), net revenues, at $3.89 billion, were 31% higher than the first quarter of 2020, due to higher net revenues in mortgages and interest rate products and, to a lesser extent, commodities and credit products. This was partially offset by significantly lower net revenues in currencies.

Goldman was the manufacturing company behind 899 structured products that sold a combined US$3.4 billion in the US market during Q1 2021, with sales volumes up 21% compared to Q1 2020, and 65% quarter-on-quarter (QoQ), according to SRP data.

The bank’s structured products were available, among others, via the Simon Markets platform, as well as the distribution networks of Raymond James, Incapital, UBS and Morgan Stanley.

Structures linked to a basket of indices were in demand, collecting US$1.3 billion from 430 products – an increase of 113% in sales volume from Q4 2020 – while products tied to single indices (US$980.6m) and shares (US$774.1m) also sold well, registering a Q0Q increase of 29% and 84%, respectively.

Its best-selling product in the US was a seven-year registered note on the share of AbbVie that accumulated sales of US$82.5m in January. Other products that achieved healthy volumes were the six-year Trigger Plus on the S&P 500 Value index (US$58.6m) and three-year contingent income autocallable securities linked to Tesla (US$43.6m), that were both distributed via Morgan Stanley Wealth Management.

In Europe – the bank’s other main market – Goldman fared less well, collecting an estimated US$138.2m from just 38 publicly offered products in Q1 2021. This marked a 73% decrease in sales volume from Q1 2020, when US$589.2m was collected from 142 products, and a fall of 38% compared to the previous quarter (US$148.9m from 61 products).

Goldman’s products, issued on the paper of Goldman Sachs International and Goldman Sachs & Co. Wertpapier, were available across eight different jurisdictions in Europe. The highest activity was seen in Sweden where it issued 19 products (US$30.4m) that were distributed via Garantum (18 products) and Strukturinvest (one).

In the UK, the bank collaborated with Meteor and Causeway Securities (two products each), and Walker Crips (one), for the launch of autcallable plans with an average maturity of seven years on the FTSE 100.

The best-selling structure, however, was registered in Portugal where BPI distributed GS EUA Sectores Autocall EUR 2021-2024. The three-year medium-term note, which was linked to a basket of four exchange-traded funds, sold €16.6m (US$19.8m) during its subscription period.

On the secondary market, Goldman issued 83,504 turbo certificates that can be traded on the exchanges of Frankfurt and Stuttgart. Indices were the preferred underlyings for these products, with the local Dax – seen in more than 19,400 products – especially popular. Xdax (3,945 products), Nasdaq-100 (3,876), and S&P 500 (3,421) were also in demand.

‘Our businesses remain very well positioned to help our clients reposition for the recovery, and that strength is reflected in the record revenues and earnings achieved this quarter,’ said David Solomon (pictured), chairman and chief executive officer, commenting on the results.

Click the link to read the full Goldman Sachs first quarter 2021 results and presentation.