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Derivatives

Merrill Looks To Tap Energy Buzz

Merrill Lynch in New York is offering investment notes linked to the Energy Sector Select Index, which references 31 energy and energy producing companies in the Standard & Poor's 500.

Merrill Lynch in New York is offering investment notes linked to the Energy Sector Select Index, which references 31 energy and energy producing companies in the Standard & Poor's 500. Structured note market watchers said this is an interesting progression from commodity-index linked notes, which have been popular with U.S. investors. Officials at Merrill did not respond to questions regarding motivation for the launch by press time.

The notes are due to launch later this month and expire February, 2008. They offer three-times leveraged exposure to the upside of the index, up to a maximum payout of around USD12 per USD10 note. There is no capital protection on the notes. Final pricing details, along with the issuance size of the deal, had not yet been fixed when DW went to press.

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