UBS AG (UBSN), Switzerland’s biggest bank, sold $946.2 million of one-year structured notes tied to the Russell 1000 Growth Index, the largest U.S. offering in more than two years.
The securities yield twice the gains and losses of the index, which follows the performance of companies with the fastest earnings growth.
The May 16 offering is three times bigger than the next- largest U.S. sale linked to stocks, according to data compiled by Bloomberg that goes back to January 2010. The sale alone is larger than the Zurich-based bank’s $759.1 million of other issuance in the U.S. this year in more than 1,000 deals.
If the Russell 1000, the most heavily weighted members of which are Apple Inc. and Exxon Mobil Corp., drops more than 20 percent, the leverage of the securities is reduced, according to a prospectus filed with the U.S. Securities and Exchange Commission. If the gauge falls below 30 percent, the notes are redeemed early. There are fees tied to early redemption and the London interbank offered rate.
Previously, Credit Suisse Group AG had the biggest equity- linked note in the last two years, issuing $257.2 of 13-month notes tied to the Standard & Poor’s 500 Index on April 1, 2010, Bloomberg data show.
Structured notes are securities created by banks, which package debt with derivatives to offer customized bets to investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, currencies and commodities.
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