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Derivatives

RBC Structures Regional Minn. Stock Basket

Brokers in Minnesota have worked with the Royal Bank of Canada to come up with a novel regional stock basket note.

Brokers in Minnesota have worked with the Royal Bank of Canada to come up with a novel regional stock basket note. RBC structured the seven-year note from the reverse enquiry, combining a zero-coupon bond with an option on the basket of 15 different Minnesota-based corporate stocks. It provides 100% capital protection and 85% participation in the growth of the basket.

Laurence Kaplan, v.p. at RBC in New York, said it is marketing the investment to its advisors in South Dakota, Minnesota and Iowa. He noted it is an attractive product because while the corporates are local to Minnesota, they are well-known names such as Target and 3M.

There are three weeks left of the marketing period and Kaplan said it was too early to say how much the note might raise. But he said RBC is interested in structuring more regional baskets. "Reverse inquiries are very important to our business," he said, adding RBC is looking to show it can accommodate different requests, providing there is an economy of scale.

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