JVB Financial, a structured investment note distributor, is offering a reverse convertible note linked to an exchange-traded fund. The structure references the Oil Service HOLDRS Trust, which invests in energy corporates, via a put option on the ETF. The sale of the option generates the investors' premium, 12% per annum. The note has a six-month maturity.
Steve Peters, senior v.p. in structured products at JVB in Denver, Colo., said JVB chose to market the deal after its first ETF-linked note issued by BNP Paribas last month sold USD3.123 million. "ETFs have been all over the news recently, and it turns out there are some that can give decent volatility," he explained. JVB chose the oil trust for this month's offering because the oil story is also familiar to investors. The group shopped for pricing from the three dealers it works with: BNP, Calyon and HSBC. It worked with Calyon for this most recent deal.
JVB has been issuing reverse convertibles for six months and Peters said it is starting to consider other types of structured notes. "We are looking at doing index-linked notes," he added, noting a launch date for such a product has not been set.
